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THE CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES

MIDDLE EAST PROGRAM

HOSTILE INTENTIONS?

THE FUTURE OF U.S.-SAUDI RELATIONS

Tuesday, May 24, 2005

A Conference Sponsored by the Middle East Program and Asharq al-Awsat

CONFERENCE ROOM C THE PARK HYATT

1201 24TH STREET, N.W. WASHINGTON, D.C.

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Hostile Intentions? The Future of U.S.-Saudi Relations

Park Hyatt 1201 24th Street

Washington, D.C. May 24, 2005

CONFERENCE SCHEDULE

8:30 a.m. Continental Breakfast 9:00 a.m. Welcome:

Patrick Cronin, Senior Vice President and Director of Studies, CSIS Tariq Alhomayed, Editor in Chief, Asharq al-Awsat 9:15 a.m. Panel 1: “Where Did We Go Wrong? U.S.-Saudi Relations from Amity to Anger.” (Moderator: Jon B. Alterman, Director, Middle East Program, CSIS)

Panelists: Rachel Bronson, Director, Middle East Studies, Council on Foreign Relations Fawaz al-Alamy, Advisor, Ministry of Commerce, Kingdom of Saudi Arabia Joseph McMillan, Senior Research Fellow, National Defense University Mamoun Fandy, Senior Fellow, Baker Institute for Public Policy, Rice University

10:45 a.m. Panel 2: “Getting Back on Track: How Much Cooperation Should We Expect and How Do We Get It?” (Moderator: Amr al-Dabbagh, Governor, Saudi Investment Authority)

Panelists: Abeer Mishkhash, Columnist, Arab News F. Gregory Gause, Associate Professor, University of Vermont Hussein Shobokshi, Columnist, Asharq al-Awsat Danielle Pletka, Vice President, Foreign and Defense Policy Studies, American

Enterprise Institute 12:30 p.m. Luncheon Keynote Address Philip Zelikow, Counselor of the U.S. Department of State and former Staff

Director of the 9/11 Commission 2:00 p.m. Adjourn

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PANEL 1 (9:10 a.m.) DR. CRONIN: Good morning, ladies and gentlemen. My name is Patrick Cronin. I am the Senior Vice President and Director of Studies at the Center for Strategic and International Studies. Let me ask before we begin to please silence your cell phones -- in fact, as I hear one going off -- we don't want that interrupting our excellent panel discussion that's coming up this morning. John Hamre, the President and CEO of CSIS unfortunately is traveling on the West Coast. He really wanted to be here today, and he sends his greetings this morning and is delighted to welcome you here to this conference which of course is in cooperation with Asharq al-Awsat, the leading Arabic language newspaper. For those who want to know something about the Middle East with their groundbreaking coverage, their sort of very lively commentary, this was the first newspaper that introduced the use of satellite to print abroad simultaneously, and also to edit remotely. It's a very impressively newspaper and excellent co-sponsor with CSIS of this event today. The Center for Strategic and International Studies is one of Washington's leading policy think-tanks that covers security issues, a range of regional issues, and a lot of functional issues from energy and demographics to economics and governments, and it's these programs led by Dr. Jon Alterman who has really been bringing strategic insight and a forward-looking perspective to issues on the Middle East. So, it's a program (inaudible) as anyone who reads his strategic comments can see or participates in programs like this. This conference this morning is very much looking at the state of contemporary U.S.-Saudi relations, and these relations are characterized, as all of you know so well, really by two distinguishing characteristics. One of them is incredibly deep and broad cooperation on energy, counter-terrorism, on diplomacy and peacemaking throughout the Middle East and beyond, and yet at the same time deep suspicion, suspicion amongst the people of America and Saudi Arabia in either of each other's government. So, today's conference we are considering the basis of the U.S.-Saudi relationship, what are the problems and challenges that have confronted it, where has it gone awry, and what are the prospects for its future and how do you put it back on track? To do this, to analyze the challenges directly in ways, to put this relationship on a more steady footing going forward, we really have a very gifted set of panelists who hold different views, to be sure, and I'm sure those will be expressed here today, as well as some of the views in the audience. I'm sure some of our panelists today will have a much brighter view of this bilateral relationship moving forward. They will accentuate the positive cooperation and ways in which to work around the challenges, and others will have a less sanguine view, a less sanguine view that underscores the pitfalls and the challenges of the U.S.-Saudi relationship, but I think all of the panelists will be united in a common conviction of the importance of the United States-Saudi relationship. This is a vital relationship and it's one that's worthy of deep and serious discussion that we will have today. Now, the title of this conference is extraordinarily provocative: Hostile Intentions,

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question mark. It's intended to be provocative, of course, and it really does capture the suspicions that are so widespread today, and really since September 11th perhaps, but the question mark is as important as the words "hostile intentions", but it really is intended to say each side -- the American side, the Saudi side -- is searching for some common understanding, the true intentions of the other side. Why is a trusted party possibly sometimes regarded as an adversary, and how can we make this a more cooperative and trusted relationship moving forward? I'm sure some in the room are going to say, "You don't need the question mark, put an exclamation mark". But I think the U.S.-Saudi relationship here is something that must be seen as central to peace and security in the Middle East and beyond, and we will show that we don't necessarily oppose, we don't necessarily embrace those who question the question mark. Instead, we really need today to delineate those areas where cooperation has worked, why has it worked, those areas where it could work better, what could be improved, and those areas that maybe frankly ought to be cordoned off, maybe it's just too tough right now, maybe it needs to be put in a box off to the side, and let's accentuate the positive and work on the areas of cooperation. So, those are some of the views that we hope we'll hear today. As somebody who is an outsider to the Middle East, somebody who focuses more on Asia, I'll be especially interested in all of your views and the panelists' views today to see whether I'm right, whether we're able to indeed come up with practical recommendations to move this forward. And I want to turn the panel over at this point to Tariq Alhomayed, the Editor in Chief, and he will introduce the panel and say some other words. Tariq? MR. ALHOMAYED: Good morning, ladies and gentlemen. It's my pleasure to be with you on behalf of my colleagues at Asharq al-Awsat newspaper. I welcome you all. This is the first effort to sponsor, here in Washington, in cooperation with CSIS, the purpose is to foster dialogue. Asharq al-Awsat has always encouraged the culture of dialogue, and as we try to practice the high standard of journalism, we also try to build a bridge of understanding between the Arab world and the west. Our position as a pan-Arab newspaper gives us the ability to do so. We print -- as Asharq al-Awsat -- we print in 12 countries from London to New York, from Saudi Arabia to Morocco. We have our reporters, our offices in more than 30 countries. Our main markets are Saudi Arabia, Morocco and Iraq. And we were the first Arabic newspaper to enter Iraq after the fall of Saddam's regime, and we are one of the main sources of information for the Arab communities in the States. So, today, as we sponsor this effort, we decided to extend our effort of building a bridge of understanding by launching our English website for Asharq al-Awsat, and at the end I wish you all the success in your deliberation, and best of luck. Thank you. Mr. Alterman. DR. ALTERMAN: Thank you very much. It's a pleasure again to welcome you all here today. We've had a slight change from the program that you see here. Mr. Abdul Muhsin al-Akkas could not come from Saudi Arabia. He is ably replaced by Dr. Fawaz al-Alamy, who is sitting to my right. You have bios for all the speakers in your schedule, so I won't go over them now. Let me just introduce Dr. al-Alamy. He is an Advisor to the Minister of Commerce and Industry in Saudi Arabia, and the Chief Technical Negotiator for

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Saudi Arabia's bid for accession to the World Trade Organization. His academic training is in physics in which he obtained his Ph.D. in 1976. He has been in the private sector for more than 20 years, and among a wide variety of posts, he's on the boards of Saudi Arabian Airlines and the Saudi Arabian General Investment Authority. What we are talking about in the first panel is to understand more deeply what the nature of the Saudi-U.S. relationship is and has been, how did it become the very strong relationship over a half century, which I think by all accounts it was, and where did it go wrong? Why did that relationship which had been so helpful for both countries become an issue where we do have a question mark surrounding it on both sides, I think, to be fair, both on the Saudi side and the U.S. side. To discuss these issues, we have what I think is a rather remarkable collection of individuals who have spent a great deal of time in their professional lives thinking about the nature of this relationship not only in the past, but also where this relationship might go. In order of speaking, we have to my left Rachel Bronson, who is the Director of Middle East Studies of the Council on Foreign Relations. Then you'll hear from Dr. al-Alamy, then Joe McMillan, who is a Senior Research Fellow, National Defense University; and, finally, Mamoun Fandy, who is a Senior Fellow at the Baker Institute for Public Policy at Rice University, and also the editor of Qadaya Almiya, a new journal coming out in Arabic, modeled along the lines of Foreign Affairs, to raise the level of debate in Arabic on issues of public concern. So, first we will hear from Rachel, then Dr. al-Alamy. Thank you very much. DR. BRONSON: Thank you, Jon, and it's a pleasure to be here today. Good morning. No relationship is as important, as under pressure, and as poorly understood as the U.S.-Saudi relationship. Saudi Arabia, of course, is described as one-quarter of the world's proven oil resources. The United States is heavily dependent on Saudi Arabia for recent military operation. And the 1.2 billion Muslims around the world look to Mecca and Medina as the religious center of gravity. At the same time, of course, 15 of the 19 hijackers on September 11th came from the kingdom, and by some accounts one-quarter of the folks cycling through Afghanistan training camps came from the kingdom. Today, notwithstanding the public handholding at Crawford that we saw between the President and the Crown Prince, the U.S.-Saudi relationship is a deeply troubled relationship. Conventional wisdom tells us that at the core the U.S.-Saudi relationship is built on a very basic bargain of "oil for security". Oil, of course, is very important to the United States as it is to the Saudis themselves. The kingdom, after all, relies on oil exports for 90 to 95 percent of its export earnings. Oil affects every relationship that the kingdom has. Even more important than its absolute holdings, of course, is that Saudi Arabia is the swing producer, the central banker of oil, if you will, and has a disproportionate influence over oil prices. Saudi Arabia holds around 85 percent of OPEC's spare capacity which, given problems in Venezuela, Nicaragua, Algeria and elsewhere, has come to mean 85 percent of the world's spare capacity. If any single problem hits a big producer elsewhere -- Nigeria's political situation devolves, Venezuelan oil workers strike, U.S. oil facilities are damaged by weather -- the only place that can quickly make up those volumes is Saudi

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Arabia. All those examples, of course, occurred right before the Iraq War in 2003. In return for greasing the international economic wheel, Saudi Arabia gets to spend vast amounts of money on U.S. training and equipment, and the U.S. extends over it a security umbrella. Since the Truman Administration in 1950, every U.S. president has committed to the territorial integrity of Saudi Arabia. This "oil for security" relationship has not always been smooth. There have been oil embargoes, notably but not limited to 1973, and there have been many congressional restrictions on what arms the Saudis can buy. Tension permeates the entire history of U.S.-Saudi relations but, by and large, the basic bargain has held and that's where the conventional wisdom usually stops and that's where most discussions of Saudi Arabia usually stop. But stop and think a moment about whether oil in and of itself is fully explanatory of close U.S.-Saudi relations across the decades. For all but six of thirty-six years between 1967 and 2003, the United States had no official political relations with Iraq, a country whose oil holdings are estimated at 115 billion barrels of proven reserve, second only to Saudi Arabia. Iran, with 10 percent of the world's oil, has lived under U.S. sanctions for 25 years. Libya experienced 19 years of American-led sanctions. In 2002, the Bush Administration supported extra legal, political efforts to remove Hugo Chavez of Venezuela. In the fall of 2004, the United States actively encouraged international sanctions against Sudan's oil exports. Successive U.S. administrations have shown a clear willingness to bear the cost of poor relations with oil exporting states. Having a lot of oil does not neatly translate into close relations with the United States. American policy of sanctioning and cutting off relations with oil producers has made Saudi Arabia's position ever stronger, and the reverse is true as well. Good U.S.-Saudi relations have given Washington decision-makers the flexibility to sanction the production of others. This begs the question of why the U.S. has sustained strong relations with Saudi Arabia. What I'd like to suggest to you today is that shared interest during the Cold War explains the character of the U.S.-Saudi relationship, one that has always been more than a business relationship around oil. During the Cold War, Saudi Arabia and America shared important interests in combating Soviet expansion, which provided a protective political layer that enveloped oil and defense interests and protected it against other disagreement such as the Arab-Israeli conflict that the U.S. and Saudis shared. The end of the Cold War explains why relationships deteriorated so quickly after September 11th, not oil interests. It is also our and Saudi Arabia's Cold War policies that helped explain why radical Islamic movements have burst onto our radar screen so violently in recent years. Understanding better the Cold War context will help suggest ways to move forward in the 21st century. Ideologically, Saudi Arabia's claim to speak for Mecca and Medina has meant that it has been a useful country for the United States to call a friend, especially because Saudi Arabia helped in the fight against Godless communism. In a neat division of labor, the Saudis focused on the Godless while the United States attacked the Communists. Given that Soviet-inspired Communism was based on hostility to religious belief, the more religious the country the more likely it would be to rail against Communism and look toward the United States. King Abdul Aziz wanted little to do with the Soviets, and banished the Soviet ambassador from the kingdom as far back as 1938. Official relations

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between the Soviet Union and Saudi Arabia were not re-established until 1990. When Eisenhower's Secretary of State, John Foster Dulles, toured the Middle East visiting every major leader and Eisenhower wrote letters of introduction for him, the letter to the Saudi king was the only one to reference the mutual interest in fighting Godless communism. American Presidents, one after another, hoped that the theocratic Saudi Arabia could serve as a counter to the reactionary secular nationalist movement that swept through the region in the '50s, '60s, and '70s. American decision-makers back in the 1950s referred somewhat optimistically to King Saud as "Islamic Pope". The 1970s represent probably the most interesting period for showing Saudi Arabia's importance in fighting communism. It was a time when the United States was exhausted from Vietnam, and we had our hands tied due to Watergate. The kingdom didn't just sit there and wait to see what the United States was going to do in Africa, for instance, where Soviet expansion was particularly troubling. With revenues reaching billions of dollars after the increase in the price of oil, Saudi Arabia put its money into three main baskets: Islamic organizations, anti-Soviet operations, and pro-Palestinian non-Marxist groups. The three often overlapped. According to data from Saudi Arabia's Ministry of Finance and National Economy, in 1972 Saudi Arabia gave in foreign aid $220 million. In 1974, that number was increased to $4 billion. In 1977, Newsweek estimated that Saudi Arabia was providing $6 billion in foreign aid. Many of these countries like Egypt, Jordan, Pakistan, Somalia and Sudan had Cold War significance. Listen to what Jim Hoagland in the Washington Post said in 1977. He said: "The Saudis are spending billions of dollars in an arc of influence that extends from Morocco eastward across Africa and the Middle East and deep into Asia. It is an arc that, by design or by accident, could easily have been traced by an American Administration eager to help overcome new difficulties in persuading Congress to appropriate money for such causes." Did Saudi Arabia do this as a favor to the United States? I would submit especially during the time of King Faisal, but you can look at it across the different kings, there was a true commitment and fear of the Communists and intent to fight them. In 1976, when the United States was pulling back, Saudi Arabia, Egypt, Morocco, France, and Iran formed something called the Safari Club. The name was taken because it was exotically African. It was set up by Intelligence Ministers and held its first meeting in 1976 in Riyadh. The goal was to stop the Soviet penetration in Africa. If the United States could not or would not repel it, this group sought to do so. The Safari Club helped to reverse a coup in Zaire and win Somalia from Soviet clutches. Its efforts were directly intent to combat Soviet penetration. But here is the rub: Where Saudi money and interest went, so did its proselytizing, a proselytizing of a very austere, intolerant neophobic interpretation of Islam. Consider how this worked in Sudan. Sudan was geopolitically sensitive because it spans strategic territories separating Libya from Ethiopia, both heavily backed by the Soviet Union. Riyadh, Cairo, Paris and Washington warily eyed expanding Libyan influence in Sudan's Darfur region. Within a decade, Libyan agents were able to traverse northern Sudan unmolested and eventually actually mined the Red Sea, something that required British and American ships -- minesweepers -- as countermeasures. In 1975, the CIA observed that Saudi Arabia helped the government of Sudan "survive leftist efforts to bring it down.” From '75 to '76, Saudi aid to Sudan increased from

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$25 to $164 million. In Sudan, Saudi proselytize accompanied its Cold War funding. In 1977, the Faisal Islamic Bank opened a branch in Sudan which became a financial provider for local Islamics. As importantly, Saudi Arabia welcomed Sudanese workers into the kingdom to fill jobs that their quickly expanding economy required. After 1973, more than a million Sudanese patriots worked inside the kingdom. In 1977, Saudi Arabia also poured significant resources into Sudan's African Islamic Center, a center that focused on training young Africans in fundamentalist interpretations of Islam. Things became more intent after 1979, which is a pivotal year in Saudi history, where three things happened within weeks of each other. American hostages were taken in Tehran nearly a year after the Shah of Iran fell, rebels seized the Grand Mosque of Mecca, and the Soviets invaded Afghanistan. This assumption of power of Ayatollah Khomeini threatened the Saudi role as the leader of the Islamic world. The seizure of the Grand Mosque was the first time since 1929 that the royal family's religious credentials were violently contested. In Afghanistan, the Soviets again appeared on the move, this time occupying a Muslim state. The answer to all three of these issues was religion, and that's where Saudi Arabia looked for the answer. Increasing religious zeal addressed all these problems: it put Saudi Arabia back on the map as a religious leader, it answered the critics of the Grand Mosque, and it provided a way to mobilize forces to fight the jihad in Afghanistan, something the United States actively encouraged. As a result, during the 1980s U.S. and Saudi interest and actions overlapped like never before. Saudi Arabia eagerly joined up with the Reagan Administration which is now pursuing a more muscular foreign policy. In Ronald Reagan's 1986 State of the Union address he promised: "You are not alone, freedom fighter, America will support you with moral and material assistance in places such as Afghanistan, Angola, Cambodia and Nicaragua." What few Americans or others realized at the time was that Saudi Arabia was actively funding three of four of these cases. Afghanistan is of course the best-known example, and Afghanistan, the United States and Saudi Arabia partnered in pushing out the Soviets. Afghanistan by now is best known as the "joint partnership", but it is not unique. The shared anti-communism embedded in the U.S.-Saudi partnership stretched from Somalia, Sudan, to Chad, to Pakistan, and beyond. The politicalization of religion was considered well worth the risk in the United States. Consider Jimmy Carter's National Security Advisor Zbigniew Brzezinski's statement: "What was more important in the world view of history, the Taliban or the fall of the Soviet empire, a few stirred up Muslims or the liberation of central Europe and the end of the Cold War?" When the Cold War ended in 1990, the relationship quickly began to fall apart and you can see this in the first meetings between the Saudis and the Clinton Administration when Turki al-Faisal and Prince Bandar go in to meet the President. It was, by most accounts, a terrible meeting. The President was ready to consult, and the Saudis were incensed that they were being asked what to do. There was no longer any sort of joint or mutually agreed upon set of goals for how to move forward in the future. And from what I heard, after the meeting Turki al-Faisal merely shook his head and Prince Bandar didn't believe that the Clinton Administration was up to the task. But throughout the '90s, different aspects of the relationship fell apart. Iraq policy

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became more strained. Policy around Afghanistan became more strained. Americans were targeted in 1995 and 1996. The peace process was the most dramatic leading to when the next administration, the Bush Administration, took over, to a situation in 2001 when Crown Prince Abdullah sent a letter threatening basically a "divorce". It was the gravest threat ever leveled against the United States save for the '73 embargo. The situation had evolved so far and so fast that the White House set up a meeting to meet with Prince Bandar for September 13, 2001. The subject of that meeting, of course, the agenda changed dramatically after the attacks. So, what does this all mean for today, and where do I leave you for the rest of the conference? One: Saudi Arabia actually does have a foreign policy. They are not "just doing our dirty work", a term I heard often when I was in the kingdom. Saudi foreign policy is a woefully understudied subject which results from both the Saudi and American disinterest in exploring the joint past. But let's return back from where we started. Oil is still very important, but in 2005 the Saudis have different options both because of the direction of the world market demand from China and because of the end of the Cold War, it is now easier for them to work with communist states. And, in fact, in Newsweek a few weeks ago, we saw the Foreign Minister Prince Saud boldly state that Saudi Arabia and China have a strategic relationship since China is the number 1 recipient of Saudi oil. It will continue, I believe, to be a business partnership, albeit a very important one, but it will revert back to more of a business partnership because of no longer operating within the Cold War confines. But God, God is really what is at stake today, the question of whether the Saudis were and are with us or against us. It was a question that was never about oil policy. The real question for U.S. policymakers and Saudi Arabia has to do centrally with terrorist financing and tolerance preached at home, i.e., issues around God, and this is why a relook at the historical record is so important. We must at least understand that Saudi Arabia's actions in the past took place within a context that we sanctioned. We did not push them to preach an anti-American intolerant Islam, but we didn't much care if they did. So long as they used religion to help inoculate the next generation against atheistic communism, it was okay. Why the Arab world has turned to political Islam is in part a response to globalization modernization, but also the global strategy chosen to fight the communists. Saudi Arabia faces a crucial question: whether their leaderships are ideologues or pragmatic. They have never had to answer that question before because both were one and the same during the Cold War. And as the United States watches from a distance, the policy question is how do we help those who are trying to pursue a pragmatic foreign policy rather than the more zealous one which is the potential. Given Saudi efforts to fight terror at home, that I'm sure some will talk about today, I think there is a reason to believe that they may be turning a corner, but we and they will have to continue to work very hard to figure out how a more pragmatic strand will dominate the debate within Saudi Arabia. For my money, this is the crucial question in the first half of the 21st Century for our policymakers to really get a hold on, and understanding where we've been and how we've gotten here should allow us to pursue a more nuanced and effective strategy in winning today's war on terror. Thank you. (Applause.) DR. ALTERMAN: Rachel, thank you very much for that remarkable overview.

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Your book is coming out on the U.S.-Saudi relationship in September? DR. BRONSON: Fall. DR. ALTERMAN: Fall. Oxford University Press. Can you put in an order on Amazon? DR. BRONSON: You can. DR. ALTERMAN: You can. Thank you very much. We will now hear from Dr. Fawaz al-Alamy. DR. AL-ALAMY: Thank you, Jon. Good morning. As the Chief Technical Negotiator, I must confess that I could not dissuade Prince Faisal from asking me to join you today at very short notice. So, I have down a few things on a piece of paper here that I would like to say, but if you don't mind I would like to start as a physicist. We believe that God has created the world in six days, and then sat down on the throne on the seventh day. It hurts me sometimes to find out that the United States is asking us to reform in one day. I think it is, as well, important to realize that while the United States took 300 years to become a republic which you are proud of, as I have heard from Senator Byrd yesterday at 7:45, when the filibuster was avoided at the Senate, it is important as well to realize that Saudi Arabia is only 100 years old, and I can assure you it is not going to take 300 years for us to reform, and we are going ahead with what we have started five years ago as a self-imposed economic form and restructuring strategy in our government in the country of Saudi Arabia. The relationship that started 60 years ago between the United States and Saudi Arabia has flourished over the years. In fact, at one point so many countries around the world, including our neighbors, were blaming Saudi Arabia for always being on the same table with the U.S., fostering the same policies, and indulging in the same foreign relationships with other countries. I believe that Rachel, when she was talking about the relationship that was tarnished after the 9/11, I believe that she did not mean exactly what she said because I don't believe that Rachel is going to blame the McVey family for what Mr. McVey did in the United States. I don't think you can blame a country for what some people did somewhere else from that country, whether they are 15, 16 or 20. Otherwise, we will be blaming all countries in the world for what happened in World War I and World War II. It is important as well to realize that when we are going through our reform and the restructuring strategy, that we have opted to do, as I said, on a self-imposed agenda item five years ago, we were not asked to do so. On the contrary, we started that ourselves in 2000, pre-9/11, and we came to the level that we can seek the accession to the WTO much quicker and easier and, indeed, we have started our negotiations within our states and nearly finalized them, and hopefully they will be concluded within the next few weeks. To this effect, I must as well address the challenges that we are going through in Saudi Arabia to come up to the level that we would like to see our country in the international arena where we are going to be joining every single other country on a level playing field. Those challenges are three. The first one is what we call Saudization, and this

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is where we would like to create jobs for the young Saudis that comprise approximately 60 percent of the population of Saudi Arabia. I think we have to be proud of this challenge, and we have to be always proud of the other challenges that we would face, the second one of them is going to be the privatization of our government sectors. We have a strategy there that 20 government entities will be privatized within the next few years, including water desalination, telecommunication, railroad, aviation, you name it, even in the educational field. And here in the educational field, as we have started the privatization a couple of years ago, we have opened up that sector for foreign investment where we have today 62 applications to set up universities in Saudi Arabia. It is important to realize that when we are going for the privatization and the Saudization, that we have the third challenge as well in sight, and that is the diversification of our economic base. We should not rely on oil as the major source of income, otherwise, I'm afraid we could be blamed again for having oil in Saudi Arabia, for being the largest oil producer and the largest oil markets, and with the largest oil reserves in the world. So, it is important that we add value to our oil and we resell those value-added products internationally, and I'm sure the U.S. realizes this because when we started this self-imposed economic reform and we signed all of those contracts with the U.S. companies, we have helped as well in participating in the manpower recruitment in the United States and in creating jobs in the United States; up to 150,000 jobs in certain states. So, the relationship between Saudi Arabia and the U.S. will keep on going regardless of whether we have a 9/11 or not. I don't think that these issues should tarnish a relationship that is a long-time relationship because I would like to assure you that this relationship is built on good faith, mutual respect, and trust. Thank you very much. (Applause.) DR. ALTERMAN: Thank you very much. We will now turn to Joe McMillan. MR. McMILLAN: Thank you, Jon. I'm always reminded when I think about the subject of the U.S.-Saudi military relationship, which is what I've been asked to address, of an episode that happened once when I was traveling to the kingdom with a senior Defense Department delegation. Before the substantive meeting got started, the head of the U.S. Delegation and his Saudi counterpart sat down for a little social get-together, and were talking about this and that and people they knew in common. And the subject of the discussion turned to Sheikh Mohammed from the United Arab Emirates, and over a very brief period of time it became obvious that the American official was talking about Sheikh Mohammed bin Zayid, the Chief of Staff of the Emirati Armed Forces, and the Saudi official was talking about Sheikh Mohammed bin Rashad, the Crown Prince of Dubai. And so they had this conversation in which the Saudi was talking about Sheikh Mohammed's prowess as a horseman and breeder of thoroughbreds, and the American official kept talking about Sheikh Mohammed's prowess as a helicopter pilot and a motorcycle racer. And I think to this day neither of them knows that they were talking about two completely different things. And the reason that comes to mind is I think it's very typical of the military relationship between the two countries is for 60 years, as often as not, we think we are

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understanding each other when in fact we're talking about two completely different subjects. As a result of that pattern, I think it's important to understand that we sort of, looking back from the post-9/11 period, have an image of the Saudi-American relationship as something that was more or less smooth and then suddenly fell apart over a period of three of four years and, in fact, certainly in the military side, the relationship has historically been subject to a number of dramatic reversals going really within a few years of the time that the relationship got started. These reversals have come, in many cases, from external factors over which neither country had any direct control -- the Israeli-Palestinian conflict, pressures of Arab nationalism that came about from the rise of Nasser in Egypt, the Iranian Revolution, the Iraqi invasion of Kuwait. But even though you can't say that any of those were either the Americans' fault or the Saudis' fault, they've had their impact nevertheless. I could cite examples everybody knows. Let me talk just about two periods that perhaps are less familiar because they happened a long time ago. During World War II, the United States was allowed to build an air base at Dhahran, which is now Dhahran International Airport, for those who are familiar with that facility. As soon as the war was over, the United States really had no use for the base anymore, and didn't have much use for the military relationship because we looked to the British to take care of that part of the world. King Abdul Aziz, however, saw the British as a problem because he saw them as essentially the patrons of his Hashemite ancestral enemies and the patrons of all the little countries with whom he had border conflicts there around the Gulf, and he wanted to pursue a relationship with the United States rather than with the U.K. The United States turned him down flatly, partly because we had no interest, partly because by the time this discussion got rolling the first Arab-Israeli War had occurred and we had an arms embargo on all of the Arab countries, and then within three years we had completely flip-flopped and reversed course and had the beginnings of a very close military relationship because suddenly the Cold War had cropped up, as Rachel covered very capably in her conversation. So, six years later -- for five or six years, we and the Brits are running parallel efforts in competition with each other in Saudi Arabia. In 1956, the Suez Crisis happens. The Saudis break relations -- actually, break diplomatic relations with the U.K. The U.K. military training program collapses. The American program takes off to fill the void. And then Kennedy, in the wake of the Cuban Missile Crisis decides that it's important to make nice with Nasser as part of the common struggle against Communism again, and then suddenly again the British come back in because they are reliably anti-Nasser, and we go back into the doldrums. We have this period of shifting back and forth as a result of these events. And even when we didn't have actual cutoffs and starts and stops, international and domestic events imposed a great strain on the relationship and whipsawed it in ways that created something less than the perfect trust that we look back in retrospect as thinking to be typical. Sometimes this was because of external events, sometimes it was because of internal strains within Saudi Arabia in particular. An example of the kind of thing that happens that sounds petty but actually has had lasting effects on the way that American officials over the years have viewed their Saudi counterparts and vice-versa. On occasion, for domestic reasons, Saudi officials have come out publicly to deny the existence of U.S.

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forces in the kingdom. A lot of us remember that happening in 1999, it got a lot of attention here, but King Faisal did the same thing in 1958 at a time when the United States actually had a base at Dhahran and he flatly denied publicly that there wasn't an American base at Dhahran. Clearly, there were domestic Saudi reasons for these statements, but to the United States, which has always placed an emphasis on from the Cold War up until today, countries standing shoulder-to-shoulder in public to confront the common threat, this looked like public desertion of the cause, and the whole dynamic of the Saudis preferring to do things privately and quietly and the United States preferring for its own valid reasons to do them publicly and loudly, has been a matter of great strain. Now, the stresses are aggravated by a number of conflicting expectations and constraints, and they exist at both the macro level of global interests and policy and at the micro level of personal management style and cultural elements, and just to run down some of these, the cultural disconnects that happen at the macro level, for the same reasons that I just talked about, about the preference for doing things quietly, the Saudis have always preferred unwritten agreements and have felt that between allies, one's word should be one's bond. This runs directly afoul of the American's need for written agreements, legally binding, everything above-board and, again, in the open. And as a result, Status of Forces have been a continuing problem ever since there have been American forces in the kingdom. There never was a pre-positioning agreement with Saudi Arabia alone among the six GCC countries precisely because the two sides couldn't come to a meeting of the minds on whether things could be done quietly and privately versus publicly and legally. And from the United States side, the Saudis have a hard time understanding why it is that in our arms sales, in particular, we don't treat cash customers and long-time customers more favorably than people who are buying our equipment using grants that the American taxpayers give them. And that sounds -- and this is way below the level that Rachel was talking about strategically -- but as you do this day-to-day, it wears on the relationship that we have these radically different expectations of how things ought to work. Obviously, the Saudi sensitivity to the presence of foreigners in the kingdom and the enforcement of Saudi social controls also has played a very serious role. Now, the United States, for a long time, was acutely aware of those sensitivities and took great care not to violate them. For probably the first 40 years of the military relationship -- almost 40 years -- the American military presence, such as it was, was concentrated very heavily in the Eastern Province. The chief of the U.S. military training mission when I first started doing Saudi Arabia was limited in how many nights a week he was allowed to spend in Riyadh. He had to maintain his primary residence in Dhahran. And it wasn't long before that that he had to have special permission to go to Riyadh at all. Now, the reason why being in the Eastern Province was important is that's where all the other foreigners in the kingdom were, and so the military didn't show up glaringly and didn't become an object of social concern. Over the course of the 1990s, of course, we were all over the kingdom, not just in the Eastern Province. And after the bombings in 1995-96, including the Khobar Towers bombing in Dhahran, U.S. forces were concentrated actually in the middle of the country, at Prince Sultan Air Base, and not in the Eastern Province anymore. And I think that even though we thought that we were keeping people hidden at Prince Sultan Air Base, and even though Prince Sultan himself stood up and denied that

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Americans were there at all, obviously the locals knew full well what was going on, and because, I think, of domestic social dynamics, that became more contentious than it would have been had they remained in areas where foreigners were more widely accepted. Then, of course, there's the whole litany of sort of petty problems that add up and accumulate and create tensions. Every year you could count on a Saudi Customs inspector to confiscate a Santa Claus doll, and this would make its way into the American press. The word would spread throughout the American military community. People would get all riled up. People in the Pentagon would get all riled up. The royal family would, in due course, step in, release the shipments, slap the customs inspector on the wrist, and next year the same thing would happen all over again. So, as I say, there's a whole series of petty things that added up to a deterioration of the relationship. Again, this is not all on the Saudi side. On the U.S. side, the Saudis would look at the onerous process of buying even more weapons – more of the same systems that they already had, and having to go through what they saw as the humiliation of congressional browbeating over arm sales, and this seemed a strange way to treat someone who had been a reliable ally on all the fronts that Rachel talked about. And above all, I would say that as we got into the late 1990s to 2003 with the War in Iraq, both sides came to see themselves as doing the other one a favor, and neither saw the other's point of view as to the basis for the military relationship. The Saudis thought that they were doing the United States a favor by allowing us to operate from Saudi Arabia to pursue our policy vis-à-vis Iraq. The Americans thought that they were defending Saudi Arabia from Iraq, and in the large measure both were right, but between 1990 and 2003, both sides lost sight of the fact that both were right, and they came to be hardened in their own respective views. Now, I talked also about the micro level, and I think there are a couple of things that deserve to be said about this to understand both where we are now and where we came from. Communication styles have a lot to do with the terms of a relationship. The story I started off with is symptomatic. As I think we all know, there's a strong distaste in Saudi culture for telling a friend "no" and, as a result, conversations sometimes seem to have concluded with a "yes" answer, when in fact, you've got perhaps a "maybe", perhaps a "no". I've been in meetings, again, with U.S. Defense officials and with Saudi officials, where you come out of the meeting -- this is at the secretarial-ministerial level -- a senior member of the U.S. Delegation turns to me and says, "Well, that went pretty well, we got everything we wanted.” And I looked at him and said, "What did you hear that sounded like 'yes'?" And he said, "Well, we said what we wanted to do and the Minister nodded his head.” "Yeah, he understood what we were saying, that was not 'yes'", and I was blown off -- you know, "No, no, that was 'yes', we're going to move ahead with this.” And as a result, we've held the Saudis to commitments, or tried to hold the Saudis to commitments, that they never made. Besides the communication styles, it's partly the result also an American perception that the Saudi treasury is a bottomless well to support everything that we need. In 1990, the Saudi government agreed that for the defense of Kuwait and the subsequent liberation that Saudi Arabia would provide all of the U.S. forces fuel, food, water, housing, and in-country transportation -- a pretty generous host nation support package. The American response to this -- and I heard this in a number of meetings in the Pentagon -- was, "That's not that big a deal because the fuel is free to them.” If you had

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suggested to any American official that just because we have a natural resource, giving it away to someone else is free, he would have given you a lecture on basic economics, but in the Saudi context, this was free. And as a result, it was badly abused. By the late 1990s, we were in a situation where the American civil engineers at Prince Sultan Air Base were tapping into Saudi utility lines without permission, to collect more free electricity. The perception that because the fuel was free, we had U.S. aircraft, fighter aircraft, taking off from carriers with their tanks only perhaps half-full or a quarter-full, meeting up with tankers flying out of Prince Sultan Air Base where the fuel was free, and filling up to go ahead and conduct their missions over Iraq. And eventually the Saudi Air Force found out about these things and it didn't make them terribly happy, especially since by the end of the '90s the Saudi Finance Ministry had got a strangle hold on the defense budget and it was the Saudi defense budget that was going to pay for the American presence, not some amorphous pot that was being held at the Finance Ministry. Finally, to reinforce something, essentially Rachel's main point, strategically, the two countries have shared a couple of enduring interests, and from the military point of view this has mainly been a common interest in the security of the oil supplies. And when they shared interest on the number of transitory issues of common concern that Rachel, I think, aptly pulled together as the religion/anti-communism issue, but beyond that there were a number of factors on which they didn't see eye-to-eye and that they never really reached a meeting of the minds. I alluded at the beginning to the fact that Abdul Aziz saw the U.S. relationship as a counter-balance to the British. I don't think the United States ever understood that the U.S.-Saudi relationship had ever been based on countering the British presence in the Gulf. The British were our special allies, special relationship. The last thing we had in mind was containing British power. By the way, I'm not sure that was always true. Our British friends, I think they quite clearly saw themselves as containing the American presence, the throwback to the old India days, but certainly I'm pretty sure the United States never understood that that's what the Saudis saw us as doing. Of course, the other issues are too well known to go into great detail, the main one, of course, being the difference of views over the Israeli-Arab conflict. This has led to some very unfortunate rhetoric on both sides, which foreshadows some of the rhetoric we see today. In the mid-'70s, Secretary of Defense Schlesinger publicly contemplated a military intervention in the oil fields if the oil embargo weren't lifted, and the Washington Post editorial compared King Faisal to Adolph Hitler, unfavorably, if I remember correctly. So, as we come closer to the present, the same thing happened all over again vis-à-vis Iraq. The United States grew increasingly impatient with Saudi caution in dealing with Saddam Hussein. The Saudis became increasingly exasperated with the fact that we were taking them for granted. I talked about the sort of low-level rip-offs of the host nation support system, but in early 2001, some may remember -- I think it was about February -- the U.S. flew some strikes against some air defense targets in Iraq, after the Iraqis had fired on U.S. forces -- some fairly robust counterstrikes. The United States did not give the Saudis any warning that the strikes were going to be carried out. And then a Pentagon spokesman stood up after they had been carried out, and announced publicly and incorrectly that the strike aircraft had operated out of Saudi Arabia. And then I can remember a number of folks being very, very upset when the Saudis announced that they were imposing restrictions on

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how American planes operated out of Saudi territory, and saw no reason at all why the Saudis should have been upset by what we had done. And so, as I say, that is there again -- I opened with something that was something symptomatic of the disconnect in how we have understood each other, and I guess I would close with another -- and considerably more damaging -- episode of ways in which our expectations didn't match up, and we damaged the relationship. Clearly, what happened on 9/11 and what's happened since 9/11 has taken the contentiousness in the relationship to an entirely new level, but it's not something that, as we look back over the 50, 60 years of military ties, that couldn't have been foreseen. Let me stop with that. (Applause.) DR. ALTERMAN: Thank you very much. We'll now turn for the final presentation of this panel to Dr. Mamoun Fandy, and then we'll open the floor to questions. Mamoun. DR. FANDY: Thank you, Jon. Originally, I think, Jon asked me to be a discussant of my colleagues rather than presenting a paper, so I'll probably stick to that role and try to provide at least some framework to what we have heard. Usually I'm very nervous when I talk about Saudi Arabia and the United States because issues are reduced to buzzwords and sound bites about two countries that are extremely different, so we talk about now the whole problem of Saudi Arabia probably as Wahhabis, I'm not sure that there are people here in America who can tell the difference between Wahhabi and Wasabi. (Laughter.) It's a very complex issue that we should not really reduce it to a level of mudslinging or exchanges that are not useful, and I'm very glad to be here around very astute scholars and colleagues that I've known for a long time, and they talk to the issues directly and address the complexity of it. As I listened to Rachel's presentation, which the thrust of it was basically the issue of security for oil, still with all the elegance Rachel provided, she still emphasized and accentuated some of the cultural elements as well as the issue of God and the issue of culture were very central to some of the problems. Political scientists always try to think of basically theories that can explain relationships or explore relationships, without the uniqueness of a country like Saudi Arabia or like the United States. There are enough theories out there to help us understand how the notions of alliance, the origin of alliance is shaped, why states build alliances, and what are the bases for these alliances, and we might learn that the United States and Saudi Arabia are not different from any category or clusters of states going into relationships. Unfortunately, this relationship between a mega global power and a regional power is certainly asymmetrical and extremely -- we've discussed a lot the Saudi side of it. I mean, most of the presentations focused on what we consider in our theory as domestic sources of foreign policy. Therefore, we open the black box of the Saudi state and looked at it terms of what are the problems that make Saudis behave the way they do versus the United States. Unfortunately, any relationship takes two, and we have to really look at the other side of it. We need to open also that black box of the mega-power and probably some of the

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responsibility for the trouble of the relationship, the deeply troubled relationship that Rachel provided a good account of, may be due to certain domestic shifts of the United States as well, the basic domestic variables affects the United States' outlook to the larger world, as well as to Saudi Arabia itself. I mean, the significance of Saudi Arabia as one of the largest producers of oil certainly affects U.S. foreign policy, but maybe that's part of an overall worldview of the United States as it tries to define its approach to foreign policy. And all of us who live here now see some kind of soul-searching within the United States between two approaches to foreign policy. Is it the Wilsonian notion of foreign policy where American values are accentuated versus a realistic approach to foreign policy that's based on strategic military alliances that my dear friend Joe McMillan pointed out. This trouble continues and various administrations take different shapes and forms in terms of looking at this issue. The Bush Administration is very -- it's really a kind of combination of Wilsonian and realpolitik in its approach to world affairs. So, probably I think maybe at some point throughout the day, I think we need to look at also what kind of variables within the United States affected this relationship. Some of the issues that my dear friend Joe raised in terms of the troubled military relationships at some point can be explained, and we can provide alternative explanations to it, given what we know in international affairs. Probably one of the basic things that I think happened after 1990 is that the U.S. military left Saudi Arabia and left for a next door country to Qatar. It might be -- I mean, one could look for cultural explanations for that, but if one looks at, let's say, how fast de Gaulle behaved in relationship to NATO, well, there is a certain security umbrella established in Europe and France felt that it can enjoy that security umbrella for free, cost free, you are not paying to that. Probably one thing explains Saudi Arabia's behavior in that sense, that Saudi Arabia looked after 1990, after the eviction of Saddam Hussein from Kuwait, to most Gulf States went into bilateral agreements with the United States, mainly defense bilateral agreements. So, in essence, there was a security umbrella that's been created in the Gulf, paid for by the Kuwaitis, the Qataris, the Dhahranis, and other groups. Essentially, we were told it can get away with really enjoying a security umbrella at a very low cost, cheaply, and this is probably -- it did what it did. And in international relations, we know that the state system is a self-help system, states behave in a rational, sometimes from the point of view of others, in erratic ways, but to ensure their own security they do things which balance costs and benefits for these states. So, sometimes, although Saudi behavior might appear that it's a little irrational or betrayal of the trust of the relationship, I'm not sure if Saudi Arabia and America are unique in terms of trust. States work for their own interest. There are good relationships and sometimes, bad relationships, but I'm not sure I buy the notion of trust and build trust and somehow there's a specialness to this relationship. I don't have an explanation that bound even as my dear friend Rachel pointed out the issue of Islamism and Saudi role in expanding Islamism throughout the region, and pointed out to the challenge posed by Khomeini in 1979. I really agree full heartedly with that point of the challenge of Khomeini, however, the issue might not be, after all, Islamism. In fact, what happened is that the Persian-Arab race question and nationalist question is the central of that here. The very seat of Islam was moved from the land of the Arabs to the land of the Persians. Arabs were nervous about their position. And that created the whole, what we call, "Islamic revival", but it was not the Saudi revival, it was in Egypt, it was in

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Morocco. It was a jolt to the regional system itself since partly these ancient people that I believe between Persia and the Arabs was pre-Islamic and very deep nationalistic component to it, so it's not Shiite-Sunni question as much as Arab-Persia question, in some sense. Even as we look at, let's say, the point that Rachel made about Saudi Arabia looking at China as an alternative to the United States in the relationships, I think probably most of the Gulf states are looking at this issue as well. I was recently in an economic conference in Kuwait, and the whole debate was about the re-examination of the Silk Road and the connection between the Gulf and China. There is an old historical memory that exists there. There are people who are looking for the Silk Road as a model for trade between the Gulf and Asia. There are actually Kuwaitis and people from the Gulf who question the relationship with, let's say, Tunisia, which is an Arab brethren country, and they felt that the relationships makes more sense, not on ideological reasons with other Arabs of North Africa, but actually in India, and with Pakistan, and with Asian countries. Others did not look just at the Silk Road as a model, but they looked at also the India office as a model, the British Imperial structure that looked from India to Saudi Arabia as part of that India Office, this particular relationship that's removed from Tunisia and Morocco and other places. So we looked at really alternative explanations into this, as we emphasize the specialness and the uniqueness and the exceptionalism of Saudi-America relations, I think that will take us nowhere. I think we need to cast our net wider and look at the issues broadly as we go on. My colleague here to the left, Dr. al-Alamy, also pointed out the issue of reform within Saudi Arabia, the three pillars, the three forms you put out, as if somehow internal reform will certainly affect foreign policy. I personally am not convinced that, let's say, if the domestic situation of the country is changed, that somehow it will be automatically reflected on its foreign policy behavior. I think it is very important, the whole host of issues that were raised by Joe as well as Rachel, there are structural issues and regional issues that are beyond Saudi Arabia and even the United States, Arab-Israeli issues and everything else, there is an assumption somehow also in the Arab world that the United States is capable, it's almost a missioned omnipotent godly figure that can change things like that, it can convince Israel to do what it wants to do. There is limit to power. I don't think the United States can convince Israel to do everything it wishes. And I don't think that Saudis are capable also of complying with everything on the wish list on the Americans in terms of a whole host of regional issues because of domestic variables as well as regional variables that exist. Probably Saudi behavior might, if our friend Steve Watts from Harvard, who wrote the Origin of Alliance, were here, probably he would provide a different explanation as to why Saudi Arabia chose to bandwagon with the United States in most of its foreign policy choices than, let's say, with China or with Russia in the past. Maybe God was at the center of it. Maybe religion is at the center of it. But, still, the Wahhabi-Wasabi crowd who has started talking these days put a great emphasis on somehow the Wahhabi nature of the Saudi state. This is really the crux of the problem, and all of us put a whole list of how to reform Wahhabis and then change it. But all of us who talk about the 60-year relationship forget that also the Saudis during that time that continued for probably for those years, they were also Wahhabi. I mean, they were from another religion. When they were friends, they were Wahhabi. When they begin enemies, they are still Wahhabis.

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So, I'm not sure the Wahhabi component of it can be considered as an explanatory variable because it exists on both sides of the relationship. In the good days and the bad days, they are Wahhabis. And if we want to build a relationship with Saudi Arabia, probably we need to look at Saudi Arabia as is. And as some of us even look at issues of reform of the Arab world and reform of Saudi Arabia in particular talk about new issues of civil society. How do we build civil society in Saudi Arabia? And we also talk about Saudi Arabia, about creating Saudi Arabia along the lines of Western states. They forget that Saudis also started out as a tribal society, that the kingdom was brought together in a unique way from probably 1911 when King Abdul Aziz came from Kuwait until 1938 the whole consolidation was a unique process. So we cannot reform that country just overnight and the point is well taken by my friend al-Alamy, it takes less than the 300 years that it took the United States, which is very optimistic. I'm glad that it's less than 300 years, but it will take time. Unless some of us want to empty Saudi Arabia out of its people and bring other people to build there and build civil society. This is a misguided approach throughout the Middle East, not just Saudi Arabia. You have to work with what's there. I mean, a tribe can still be part of what we call al-mujtama’ al-ahli, not necessarily civil, but part of the whole set of institutions and structures that are indigenous to the place. I'm not sure if some of us decide to put together a human rights organization and a human rights watch in the middle of Riyadh as an institution and hope that that grafting will take hold in a year -- I think that's terribly misguided. But probably if somebody talks about, let's say, indigenous ideas of reform that really have legitimacy and have currency and continuity, probably we'd have something useful. My dear friend tells me to shut up, and probably I've gone over time, but what I would like to emphasize as my final point is that Saudi-American relationship needs a deeper look into both countries and the domestic variables of both, and probably I would assign the blame in asymmetrical relationship between a big power and a small power, regardless of Saudi Arabia and America, on actually what's happening inside the bigger power rather than the smaller one, and that's the logical point. And so we need to probably discuss the American side of it, and we need to really let go to gimmicks, as I said, of people walking around talking about Wahhabis and Wasabis. And I will end here. Thank you. (Applause.) DR. ALTERMAN: Thank you very much. I think it's a sign of the richness of the subject that our basically defense-oriented presentation had to do so much with culture, our basic diplomatic presentation had so much to do with defense, and we're still not sure what the relationship of the domestic environment in both Saudi Arabia and the United States have to do with either country's foreign policy. That means, of course, that it's your questions that have to resolve these issues, or at least force the panelists to do so. We're going to have three rules for the question period. The first is you have to identify yourself and where you're from. The second is you get one question, and the third is your question must be asked in the form of a question. That does not mean that you make a five-minute comment and end with "what do you think?" You need to actually ask this rather remarkable set of panelists what they think about something at the start. We'll start with -- wait for the mic, if you would -- fourth rule.

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MR. KUBER: Stanley Kuber, with the CATO Institute. One of the issues that hasn't come up so far is the global war on terror, and as I read the press in much of the Islamic world, there is a concern that the United States is using the global war on terror as a cover for a global war on Islam. Which countries are attacked -- Afghanistan, Iraq -- recently, in particular, the incidence with the Koran, and all these demonstrations. And what I hear now in particular, if a third country is attacked and there are noises about Syria and Iran, that would be the proof that this is simply a global war on Islam. I'd like to know what the panelists think of this because this wasn't really mentioned. If you talk about hostile intentions, how is this now being perceived in Saudi Arabia and, in particular, what do you think would be the impact if there were military action -- even limited military action -- against another Islamic country? DR. ALTERMAN: Before we go to the panel, you're not suggesting that we sort of put in another country before we attack another Islamic country, just to make it look better? (Laughter.) MR. McMILLAN: Before I answer that, actually this is a good opportunity to say what I was supposed to say at the beginning, which is that what I'm saying are my private views and not that of the U.S. Government, et cetera, et cetera, the disclaimer that I know you've all heard many times. My first reaction to that -- and I understand why people in the Islamic world see it that way -- but against that understanding, you have to balance the recognition that the World Trade Center and the Pentagon weren't attacked by Chilean Boy Scouts. So, you go out and look at where the terrorists who belong to the group and the affiliated groups that attacked us are, and you look at the places where you might need to use force as the way of dealing with them, as opposed to working with local governments, you find out that most of the places that are problematic are countries that are predominantly Muslim. Now, if I were in charge of terrorism strategy, which I'm not, I would say that invading -- doing large-scale conventional operations to change the regime of a country should be rather far down the list from this point forward of the ways that you fight the war on terrorism. In Afghanistan, it was the only thing that could be done; there just weren't any other options as a way of dealing with that problem. With Iraq, I think there are a lot of things at play, some of which had to do with the way people perceived the war on terrorism, some of which had to do with other dynamics and other imperatives, and I'd counter that by saying I wrote before the invasions I thought we ought use force to get rid of the Saddam Hussein government, and I still think we were right to do that, so I'm not criticizing what we did in Iraq, I'm just saying that I don't think that ultimately the war on terrorism just explains all of it. But from that, looking forward, I don't see military action to change regimes as necessarily the most sensible way of fighting the war. So, while I would say I think the perception that somehow the United States is picking on Islam by taking military action in countries where terrorists happen to be is an unreasonable criticism. On the other hand, I don't think that going off and invading Iran, Syria, Saudi Arabia, Egypt, Sudan -- take your

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pick -- would be a very smart way to proceed from here on. DR. BRONSON: It's a very interesting question, and I think Saudi Arabia is dealing with the war on terrorism in a couple different ways. One of the things that struck me on my recent trip to the kingdom was how the war on terror has come home to the kingdom in a way that I don't think it has in other Arab countries. What struck me most after the 18 months of denial about the role -- could they have been Saudis, and all this -- was a recognition that, indeed, there were Saudis on those planes, and that there was something going on inside the kingdom that -- and I heard repeatedly -- that had gone horribly wrong. There's a cancer in the society that needs to be excised. Something has to change. And I think Saudis feel it themselves after the simultaneous bombings in Riyadh of May 2003. Their country, certainly in the big cities, are under siege. And you see checkpoints in a way that I hadn't seen before. You see guys with guns on top of sandbags pointing down in a way that in some ways -- coming from New York -- was somewhat familiar after September 11th, but was very different for Saudis, and they haven't dealt with that kind of security apparatus in their own country, I think, the way that they are faced with it now. So, I think that there is a recognition of the battle at home, and that it truly is a battle at home about the future course of their country, something that is difficult for us to influence that much, although we need to try as best we can. So, I think that's going on at home. The question for me is what's happening outside of the borders, which I think is the essence of your question, and here for Saudi Arabia I think we can expect certain things and we shouldn't expect certain things. Saudi Arabia is not going to, unfortunately, be the leader to remain quiet these days around the Newsweek story. They're going to have to get out ahead and say, as they did, that they're sort of going to take the lead. We'd rather they wouldn't, but they are. But I think that what we want to see is to follow the money, to make sure that the money that did go throughout the world during the '70s, '80s and '90s, for reasons I talked about in my presentation, are either curtailed or used for different kinds of preaching with more accountability and more transparency, but I don't think that Saudi Arabia is going to lead the charge to say it's not against Muslims, nor should we expect it to. So, I think that there is a sense in Saudi Arabia that they are fighting a battle of terror. There is a sense that the United States is pursuing something more than just the war on terror, and they are sort of caught in this sort of netherworld of believing they are fighting it at home, but I don't believe that they're going to take an active role in endorsing our positions internationally. DR. AL-ALAMY: I would like to say one thing, if you don't mind, and that is I don't think that we can blame a country or a religion for terror because I believe that terror is a global criminal act that has no relationship to a religion, a policy, or a society. So, it is very difficult for us to speculate what is going to happen in one country or the other, if somebody is going to invade that country because it has some terrorist activities. DR. ALTERMAN: Before I call on somebody else, I'm going to use the priority that I actually have a microphone to just point out I was in China a couple of weeks ago

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looking at many of the same questions Mamoun was looking at in Kuwait, and I'm a veteran of having fought with people in the U.S. Government who said that terrorism is all about something, whether it's Islam or poverty or something, and there's just sort of one or two reasons and you solve the problems and the problems go away. And it struck me that China is an example of a country which has most of the indicators the U.S. says leads to terrorism except it hasn't much terrorism. I mean, you have an authoritarian government, it's repressive. You have a lack of free speech, I mean, all the kinds of things that supposedly are policies the Middle East are going to use to get rid of terrorism are present in China without terrorism. So, I think we have to look more deeply to understand the kinds of variables so we can have the kinds of proper policy responses. MR. DAWOUD: My name is Khaled Dawoud, I'm an Egyptian journalist. I'd like actually to ask Dr. Fandy if he wasn't a little bit soft on the role of Saudi Arabians spreading a certain version of Islamic -- extremist version of Islam throughout the Arab world. I mean, being both of us Egyptians, and we know in the '80s and '90s about the role of Saudi in art in Egypt and imposing a certain version on us like not allowing men and women appearing on the same screen for certain ways, and it went throughout the Arab world, I think. So, that's one question. And another question I have for Mr. al-Alamy, if it's possible to make some immediate steps to make us serious and (inaudible) such as allowing women to vote, allowing women to drive, without a backlash. I mean, my feeling from many Saudi friends that I have is that maybe the minority is imposing its view on the majority and not vice-versa. So, maybe perhaps you can tell us whether such things could be done right away. Thank you. DR. FANDY: (inaudible) would be the nationalism component of the question. Both of us are Egyptians, and I think both of us we have to admit that Al-Qaeda is co-piloted by -- sorry to use the metaphor -- by Ayman Al-Zawahiri, so it flies with two wings, with an Egyptian wing and a Saudi wing. And if we were to be candid, I think, with Syria's people, we have to admit also a certain degree of culpability and responsibility. And we look at probably a step farther where Saudi Arabia might have -- and I'm not being soft on Saudis -- Saudi Arabia might have contributed to the rise of Islamism, but this can be seen as part of the whole Saudi-Egyptian conflict for dominance in the region, that is Nasser versus King Saud. And when Nasser had Sultalara, basically that was the era of Egyptian hegemony over the Arab mind, if you will. Gradually, with '73 and the oil boom, we looked at sort of the Gulf world view dominating, and even Gulf values because many of us write in Gulf newspapers, and many of us appear on TVs owned by businessmen or governments from the Gulf, and so on and so forth. So, the issue is larger than that and if we take a second cut at the issue, we look at Saudi Islamism at its base -- and most of us assign blame to Wahhabism but we haven't looked at what happened when Nasser threw out the Muslim brotherhood out of Egypt. Saudi Arabia, yes, indeed, received the Muslim brotherhood in the same way it received Sudanese workers and other workers, but the Muslim brotherhood nested in Saudi educational system and affected probably in the same way that hijackers hijack airplanes today, they hijacked many of the institutions of a (inaudible) that did not have a tradition of strong institutions.

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I mean, some of us look at Saudi Arabia from the time of Mohammed 'til today. I want to remind you the Saudi state was born in 1938 as a kingdom and it is a modern fragile state with nascent institutions -- '32, sorry -- nascent institutions that are weak. So when the Muslim brotherhood went there, they transformed it. So we have a mix -- a Molotov cocktail mix that Muslim brotherhood ideology say it's Qutb plus Saudi Wahhabism which is not -- Saudi Wahhabism by itself might not be as deadly but probably the two, a good combo of them can be really bad. So, if we're looking at the issue of Al-Qaeda and really think that Saudi Arabia is the birthplace of Al-Qaeda, this is very simplistic in many ways. If we look at the list and the menu of who's who in the Al-Qaeda leadership we're looking at Osama bin Laden as the chairman of the board -- and I spent like probably for the last ten years looking at these names and where they came from and so on -- but we have the COs of -- we have the CO Ayman Al-Zawahiri, Muhammad ‘Akif, Abu Sinna who is from the Islamic Jihad, and under him there is the fellow now who took over the military wing who lives in Iran today. So it's a combination of a variety of groups. Saudi Muslim brotherhood did not find a hospitable place in Saudi Arabia, it moved next door to Qatar where it is enjoying also great relationship. So, you're looking at a system that's weak, but also you're looking at a combination of forces. The very nature of the threat -- and I'm going to end at this -- is we're looking at a transnational network. So, to reduce it to a fixed unit of the local system, whether it is Egypt or Saudi Arabia, is misunderstanding the makeup of the threat and, thus, I think, any kind of prescription or recommendations we will make as policy recommendations will be certainly misguided. Thank you. DR. AL-ALAMY: I would just offer the gentleman that reform in Saudi Arabia will get us one day there, so you have to bear with us. Everybody has to bear with us, but we are moving forward. Thank you. QUESTION: (Inaudible.) As an economist, I would like to ask this question. What is the impact of globalization on the U.S.-Saudi relationship since 1990, we have emerging new powers mainly on the economic side, and I would like an answer to that question from any of the panelists. DR. AL-ALAMY: Well, as you know, we have opted in U.S.-Saudi in 1996 to join the WTO, which is basically the globalization of economic policies all over the world, under the rules of the GATT and the other agreements which are embedded in the Uruguay Round at the end of 1987. I think globalization for Saudi Arabia and the United States will put those two countries as allies on the same table, in the same group of companies, that will be fighting for better reform, econometric reform and trade liberalization in the world through the WTO forum. So, it is a practical situation for Saudi Arabia today that we have, for example, all IPR rules and regulations, intellectual rights and regulations, are in place. We have all the customs valuations, all the enforcement of those rules and regulations, all the transparency, predictability and due process is in place, so basically when you are an investor and you would like to invest in Saudi Arabia or the U.S.A., you are going to be in the same level playing field, so you know where you're going to invest your money, what you are going to get at the end of the day.

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The only difference would be the comparative advantage that you will get out of that country. For example, in Saudi Arabia, you would only be taxed up to 20 percent on your profit, which is a corporate tax -- there is no personal tax -- corporate tax 20 percent of your profit, and you can have losses carry forward for as long as it takes. In the United States, only up to ten years you can carry your losses forward. So, globalization will affect both countries in a better way, in a positive manner, but you can use your comparative advantage to actually compete between each other. DR. ALTERMAN: If I may come in on a micro level as opposed to a macro level, it seems to me that what globalization does is it forces choices that people have to choose between the traditional, modern, neotraditional, and people make all those choices, and the response is not necessarily coherent. And as people get used to those choices and make different choices, that creates a certain amount of ferment. And I think the challenge is can you continue to ferment and create a more dynamic and open system, or in some way does it get short-circuited and things go off in a not very healthy way. And I guess what we're seeing not only in Saudi Arabia but around the world that I think the fertility of ideas is really remarkable what's going on. When you look at the more than 200 Arab satellite television channels and see the incredible variety from religious programming to game shows to news to movies to everything else, it suggests to me that this process of people figuring out what future they want to move into and where they fit into it is going to -- and what Arab identity and what Saudi identity, national identity in any of those things means is going to be one of the chief challenges of the next decade or two, what is it to be authentically Arab, what is it to be authentically Saudi? There's no obvious answer to those kinds of questions, and there's going to be a fair amount of debate and ferment as we move toward it. MR. KHALIL AL-KHALIL: Khalil Al-Khalil. I am one of Asharq al-Awsat writers and one of those newly appointed as a member of the Consultative Council of Saudi Arabia. First of all, Mr. Chairman, let me thank you for this beautiful discussion and asking Asharq al-Awsat and CSIS to bring this group for discussion in Washington. I want to make just two comments. One is about an organization mentioned by Rachel, and the second one is about Wahhabism. Will you allow me to do that? Thank you. First of all, about the charitable organizations of Arabia, I would like to tell you that you should not get excited because a long time ago in the '80s (inaudible), the ‘80s also of Arabia has been taking care of everything almost in the kingdom of economic and flourishing economic power. But this has been changed lately now, so it seems to me that the Saudi organizations will be focusing on internal issues more than external issues. It wasn't -- what I wanted to say, the money wasn't sent outside for political purposes, it just happened like that. Also, the government now has been regulating in a very strong way the new organizations and most of these organizations will be under the Ministry of Foreign Affairs. So, I just want to mention that to your knowledge. About Wahhabism, I understand the concern about Wahhabism. In fact, we in Saudi Arabia also are troubled by some of the extremist exercises by some of the religious beliefs or what's called mutawa’a in Saudi Arabia. In fact, my kids sometimes when they go out and my wife will complain about what they are doing and saying why, the government should stop them, but let me say this. We should differentiate between two forms of

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Wahhabism. One is the newly emerged political Wahabbism (inaudible words) the movement of Wahhabism is just to say back to the basics in Islam, that's what it is about. But the political of Salafism (inaudible words) doesn’t represent the movement of Wahabbism in Saudi Arabia (inaudible words). The second point, Wahhabism is the mainstream Salafism which is really to some extent that which is in Saudi Arabia. The original one focuses on the Muslim communities and Muslim societies, and there is, for example, never engaging in war between other countries and nations based on religion. We do not see it in Saudi Arabia. (inaudible words) By the way, I consider myself as a Wahhabi because I graduated from the Islamic college and came to the United States and studied and have been in the United States about 17 years. I have my daughter studying now in Georgetown University and another daughter who is studying medical school in Saudi Arabia and we lead a happy life and we see ourselves as regular people, not really different from other people and that is, to me, what is the meaning of mainstream Salafism or Wahhabism. This is an issue that I think should be considered -- not really to think that or to –- now, what the media is doing is to see Wahhabism as a synonym of terror, with violence, with other issues, with other stuff that we do not approve and that you do not approve. Thank you. DR. ALTERMAN: This will be the last question before we break between the panels. QUESTION: Ron (inaudible), Kuwait News Agency. Mr. Fandy, your final point about understanding the relationship through a deeper look at the domestic environment, could you go a little bit more into what you meant in regard to the United States on that, and then also a little bit on the disagreement between you and Mr. Al-Alamy on the issue of trust being a firm basis between the relationship, if you might engage one another on that. Thanks. DR. FANDY: It's very difficult. First of all, I don’t think that I'm very qualified myself to address the shifts in domestic policies of the United States and how effective -- Rachel or Joe or even Jon might be much more qualified to say something about basic shifts in administrations and ideological swings that happen in the society, but certainly what I noticed in my passing interest in American politics is certainly what we're looking at in the United States is a shift, is a cultural shift -- and Pat Buchanan would call it the cultural war, or he used to call it the cultural war in the United States, with the certain shifts taking place in the ideological makeup of both society and government. But one point I would like to make based on my research, something that I know is studying Saudi Islamics, especially the works of Sheikh Salman al-‘Uda and Sheikh Salman al-Hawali and others, I was very struck by the deep knowledge of Sheikh al-Hawali in particular of the shows that they put out by Pat Robertson and Jerry Falwell and many U.S. fundamentalists today, that what we're looking at is really the exchange between, let's say, Jerry Falwell and al-Hawali is really sort of a fight between various strands of right wing or fundamentalist strands and they're sort of fight in the backstreets or alleyways of history, if you will, that should not significantly affect what's taking place in the main square in the relationship between two countries, but certainly what is happening here domestically reflects or affects what is happening there; that Saudi and Egyptian and Moroccan Islamists

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are also in the same way that they responded early on to the removal of the seat of Islam from the land of the Arabs to the land of Persia, they very much also feel threatened by the revival of other religions, especially in Europe and the United States, and they feel somehow they have to do likewise. And certainly when things cross borders, they are usually skewed and probably exaggerated, so if you read Arab newspapers today or look at Arab television reporting on the rise of new conservatives in America or the rise of religious fundamentalists it would be quadrupled in size and made bigger than what actually is to the point that the whole idea of the Newsweek story gained tremendous magnitude and tremendous response. In normal circumstances, I think same people would say "I don't really believe that decent American people would do such things,” throw the Koran in the toilet and what's the symbolism of that, and it sounds insane in normal circumstances but given the abnormality of the situation, all these stories are believed. So, I think as we take you back to the question of globalization there is also globalization of ideology, globalization of ideas that are taking place where what happens at the center and the metropolis whether the United States or in Europe certainly affecting the periphery and the way they respond in cultural and religious forms. QUESTION: What about the trust thing? DR. FANDY: I don't believe in trust in international affairs. This is a self-help system, there is no -- states maximize their interest, and there is no such thing as trust or friendship, no, sorry. MR. McMILLAN: A couple of things came to mind in terms of examples where you could say that American political dynamics that had nothing to do with Saudi Arabia had an impact on the relationship. One, post-Vietnam reaction in congressional-Executive relationship where the credibility gap in the Vietnam period found its expression in a number of laws that were passed by Congress including the Arms Export Control Act that gave Congress a very strong oversight role in defense sales and so that ended up having a sharp impact on the terms by which the U.S.-Saudi was conducted because suddenly things that had been done very quietly and privately Executive Branch to Saudi government now were out in the glare of publicity and up for debate in the broader political spectrum. Another one that's perhaps less obvious was our deficit consciousness in the late 1980s and early 1990s that led to what those of us at the Pentagon, sort of at the working level, called "Operation Tin Cup" when we did the Desert Shield/Desert Storm, when we went around to everybody demanding that they pony up money to pay for the operation, and that's what led to the heavy demand for host nation support from the Saudis that in turn ended up having all kinds of consequences down the road in terms of the way the two countries saw that cooperation in the '90s. So, that's just a couple of examples that come to mind. I'm sure we could sit here and spin more of them further out. DR. AL-ALAMY: Well, on the trust issue, I think the Republicans and the Democrats built their notion yesterday and their agreement yesterday on trust between themselves to get the Bush nominees for the three judicial persons here in the United States. I think trust could be built between other countries and the United States. If we do not use trust in the world today, I don't think we will be able to encourage

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the agreements that we will have in the future between two countries. This is my feeling. DR. ALTERMAN: Rachel gets the last one. DR. BRONSON: I think that we have to understand this issue of trust within a political construct. The reason there was all this trust built up for decades was because of a political overlay that bound the relationship and that’s why you had Saudi students coming to the United States, why businesses were given preference, it all happened within a context that I think shifted. And I think to rebuild that trust, we don't serve ourselves well by saying, well, we used to trust each other in the past, we need to figure out how to trust each other in the future. We need to think about how you build up that trust in a different context. The war on terror is going to be part of that. Increasing educational exchanges are now move important than have ever been. The President put it on the agenda at Crawford, issues of visas and things like that. We need to be more pro-active about how to build trust among members of Saudi society, I think, that want to be helpful to the United States and those in the U.S. want to be helpful to Saudi Arabia. I think Saudi Arabia is in a struggle and a fight right now for its soul, and to the extent to which we can help decide that we'd like to win, I think we need to think of ways to build that trust back, and I think it does come back largely -- it's the soft stuff, the unsexy stuff -- but education and student exchanges that those in Saudi Arabia who I spoke to are calling for desperately. DR. ALTERMAN: Thank you. I'd like to take about a seven-minute break so we can start the next panel, but first let me thank the panel for a remarkable set of presentations. (Applause.)

PANEL 2

MR. AL-DABBAGH: Good morning, ladies and gentlemen. My name is Amr al-Dabbagh. I'm the Governor of the Saudi Arabia General Investment Authority. I'm very happy to be here today to moderate this session. We are here in the States in Miami celebrating the 60th anniversary of the meeting between the two leaders, King Abdul Aziz and President Franklin Roosevelt. That meeting witnessed the establishment of the parameters and the framework that have governed the socio-economic, political, security and military relations between the two countries for the last 60 years. In today's session, we're going to touch base on the level of cooperation and where we should take it from here. We are very privileged to have with us on the panel some prominent personalities from both countries. On my left, Danielle Pletka is Vice President of Foreign and Defense Policy Studies at the American Enterprise Institute. On my right, Professor Gregory Gause, an Associate Professor of Political Science at the University of Vermont, and Director of the University's Middle East Studies Program. On the far right, Abeer Mishkhas is a columnist and feature editor at the English language daily Arab News. And far left, Hussein Shobokshi, President of the Shobokshi Development and Trading Company, also a prominent columnist in almost seven daily newspapers in Saudi Arabia. We will start with Dani, and please be brief. We'll have seven minutes per panelist, and –

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MS. PLETKA: Why don't we start with the order that Jon gave us? MR. AL-DABBAGH: We'll start with you. MS. PLETKA: Start with me. MR. AL-DABBAGH: Please. MS. PLETKA: That's sad. One always enjoys the privilege of going last. Speaking as a veteran of many conferences, our sound system almost never worked when we wanted it to, so I want to be sure that everybody can hear us. Thank you very much for that very kind introduction, and to CSIS and Asharq al-Awsat also for hosting this, I think, very interesting and extraordinarily timely conference. I've said that I need a poke if I speak too long, or I guess you could start yawning. The question before us -- and I want to read it exactly because I thought in and of itself it was a rather provocative. "Getting back on track: How much cooperation should we expect, and how do we get it”; rather a demanding question. Let's start with the issue of expectations. What right does the United States have to have expectations of Saudi Arabia and what Saudi Arabia does with its own government? Why is it our business? I think it's important for us to actually establish that fact before we move on because, after all, if you think it's not any of our business, then all the rest of the conversation is moot. So, why is this the business of the United States? Some of the answers are fairly obvious. The stability of Saudi Arabia is in the interest of the United States for a whole variety of reasons -- it's size, it's importance, obviously oil issues -- but being really one of the anchors of the Persian Gulf -- the Arabian Gulf, for everybody in the audience -- is an extraordinarily important role that a country plays, and I think the United States rightly has a very strong interest in the future and the stability of the country. What, however, is crucial for us is for there to be an evolution in Saudi Arabia, accepting, I think, as we all do, that the status quo is not tenable into the distant future, that evolution is crucial, not revolution. I think we can all agree on that question, but one thing that perhaps we would not agree on is what the likelihood is of revolution. And when I say revolution, I don't want to analogize it to Iran, or even to put a particular face on that picture, but just to say that sudden unexpected instability change and even a potential change of government would encompass the idea behind revolution, and even though there are plenty of people in the United States who are not desperate fans of the government of the kingdom of Saudi Arabia, I don't think anybody is terribly interested in seeing a revolution, at least not from within our government, but the seeds of revolution really are there. If you look at unemployment rates in the country, if you look at levels of dissatisfaction, if you look at the fall in per capita income over the last decade, decade and a half, if you look at the problem of youth and the number of people entering the job market every year -- and here we are talking, remember, about men only. If we factor in women, that would be an even worse problem. These problems have been outlined repeatedly in various U.N. reports, in U.N. DP reports, they have been the object of lengthy discussions, but at the end of the day, while everybody recognizes that there is a problem, the solutions

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really have not been forthcoming. Then what are the other problems, the seeds that we see? The elections that took place. These were elections of a sort, but they certainly didn't live up to any of the ideals that one might expect of a democratic election. From the standpoint of the Saudi people, it certainly didn't get a vote of confidence. If you look at participation rates of about 20 percent, maybe a little more in certain areas, maybe a little less in others, that's not a huge vote of confidence in this great new offering from the Saudi government for participation in their government. That means that certain needs weren't answered. It doesn't necessarily mean that people aren't ready or interested in elections. We really haven't tested whether people are able to participate in elections because they weren't true elections. None of the openness that is necessary to start political dialogue, to actually have genuine political parties, to have grassroots organizations, to be able to actually diversify the Saudi body politic is there in Saudi Arabia right now. Yes, there is more openness than there has been in the past. Yes, people are perhaps "slightly" freer to discuss the shortcomings of their own government -- and when I say slightly, I want to emphasize that word -- but at the end of the day, political dialogue at a grassroots level is not easy, it's not simple, and without that you are going to be faced with two choices -- extremists on the one hand, and the government on the other. And, finally, I would say on the list of seeds of trouble are the requirements that President Bush himself laid out last week in a very important speech that he gave on democracy. We've heard a lot from this Administration about democracy and liberty and freedom, and freedom and democracy and liberty, but it's never really been given too high a level of resolution. Last week, the President actually laid out some details -- and I brought with me the five keys that he listed to any successful democracy. I thought it would be useful to just lay them out very quickly and test whether they are, in fact, present in Saudi Arabia. Successful democracies need freedom of speech. Hmm, not really a passing grade. Successful democracies need freedom of assembly. Hmm, not really a passing grade. Successful democracies need a free economy. Not really. All democracies need an independent judiciary. That's not really there. And, fifth, all democracies need freedom of worship. Well, that's not there at all, but that's perhaps a slightly different discussion. Now, one could rightly say that perhaps it's unfair to hold any country that is moving from autocracy or a different form of government towards democracy to these high standards. The question really is is Saudi Arabia moving in that direction, and the answer to that from my standpoint is, almost not at all. Why is this our business? Well, if, in fact, Saudi Arabia directly or indirectly is feeding a constituency for Al-Qaeda, that is the business of the United States. If it is, indeed, exporting and continuing to export extremism in a variety of ways, I think that that is also the business of the United States. And, finally, when the United States says that democracy is key to the future of the Middle East and to the future stability of the region and to our own future national security, it is important that we put our money where our mouth is. We need to actually work towards making these things happen, and that's a cooperative process, I hope, but how much cooperation should we expect? That was the second part of the question.

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I don't like to call it cooperation because I think that the first beneficiary of reform will actually be the Saudi monarchy. The second beneficiary of reform will actually be the Saudi people. It's not about cooperation and expectation, it's actually about doing the right thing for the country and for the long-term security and prosperity of the people but, in truth, the government should be doing much, much more. They should have -- and I was told to be extremely specific here. I know I'm going to leave some things out, but I did my best. There should be an electoral system that does not lend itself to hijacking but, in fact, promotes openness, dialogue, and choice. There should be an end to the half-heartedness of the Royal Family in actually promoting these elections and looking at them. Political dissidents and prisoners should be let out of prison if they have not, in fact, been guilty of any acts of violence or incitement to violence. Outsiders should be allowed in to assist in grassroots political organizations. Let's face it, if a country hasn't had the experience of doing such a thing, it's not simple. There is not, contrary to what many believe -- perhaps even myself -- there is not a democracy dream. It's not just a matter of getting rid of the leader and then everybody can go out there and they have a fully-fledged democracy -- we have learned that very nicely in Iraq -- but, in fact, these are lessons to be learned and there are outsiders who can be extraordinarily helpful in providing those lessons. There needs to be drastic changes to open up the economy. At the end of the day, people need to be employed. There has to be a campaign against corruption. I think that would go a long way in promoting the credibility of the government. School curricula have to be modernized not against Islam -- and we should always be clear, this isn't about religion, it's about the things that the Arab Human Development Report talked about, it's about educating people to do jobs that actually pay them money that actually sustain them. Education needs to be for the 21st century. People need to know how to use the Internet, just to put it most baldly. There could be exchange programs opened with the Islamic world. They don't have to be with Europe and the United States, why not with North Africa, why not with Lebanon. That kind of integration would be, I think, an excellent spur towards the kinds of changes that are necessary. They should build a constituency for women to vote. After all -- after all -- if Kuwait can do this -- if Kuwait can do this, Saudi Arabia can do this as well. Now, the last part of the question, how do we get the Saudis to do this? Again, not exactly the way I would have formulated the question, but I think we have to face up to a simple fact -- it will not happen without pressure from the outside. Notwithstanding the various statements to the contrary from our own government, it will not happen. Why will it not happen? Because it hasn't happened. We have empirical evidence it hasn't happened thus far. What should we do? The United States should prioritize its dialogue. If this is important to us, we should talk about it. In fact, while we have been complaining, lo, these many years, about the lack of openness, the lack of change, the lack of reform in Saudi Arabia, I don't believe this has come up too often in our diplomatic dialogue. That's a big problem. If this is important to us, let's talk about it. Let's put it up at the top of our priority

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list, and let's recognize that we need to offer help. We should put our money where our mouth is. Let's offer the help to do the necessary things. Now, understanding that carrots, in fact, may not work, that help may not be accepted. In fact, I think that in some instances it has not been accepted. If it doesn't work, we need to begin ratcheting back, as we did in the last several years after 9/11. Change has to happen. One of the ways that we can ratchet back is that our military relationship with Saudi Arabia can change. That has been a cornerstone of our relationship. It does not need to be a cornerstone of our relationship if, in fact, we do not have confidence in the sustainability of this government. We could isolate the kingdom from others who are willing to reform in the region. There are plenty of people, there are plenty of governments, there are plenty of political parties in the region that are enthusiastic about reform. It may not be American style reform, but it is reform nonetheless. We can work with them and we can not work with the kingdom, if absolutely necessary, and we can also bring in alternative Saudi interlocutors and reach out to dissidents, particularly in our own country, something that hasn't happened very aggressively. I think that that sends an important message, and we ought to be doing it if only to wake up people to the importance of dialogue and reform. Not all of these things are going to happen. There are many things additional to this that would be very helpful, but we have to recognize that if change is not in the offing, it is going to be extraordinarily dangerous for Saudi Arabia, and therefore dangerous for the United States. (Applause.) MR. AL-DABBAGH: Thank you, Dani. Abeer? MS. MISHKHAS: As a journalist, I'd like to stick to what I know best, which is media. I'd like to talk about the question we're talking about today that how do we get back on track, and what sort of cooperation we need. Actually, I'm going to take something from the first panel, they gave me an idea when he said we are talking about two different subjects, and I have to say yes, we are talking about two different subjects. Somehow, I feel like the media on both sides don't really understand what the other side is about. Just to give you an example, there was something in the Newsweek two days ago about Kuwaiti women, and it was all about how they got the vote. And the point that the writer pointed like and made it bold really was that women in Kuwait cannot celebrate in the streets and dance to celebrate their voting rights. And I couldn't see why that is important. I mean, is it the priority that they get the vote? Why is it important for anybody coming from outside to see women dancing in the streets? It's not part of our priorities, it's not part of our culture anyway. So, obviously, that person did not understand what the whole thing is about, didn't understand what Kuwait is about, or for that matter Saudi Arabia later on. I have to say that, in general, the picture of Saudi Arabia in the media has been associated either with, before 9/11, actually with the Arabian Nights, bedroom, sheikhs, dance, camels, and all these sort of things, of course, painted by Hollywood movies, and then the after-9/11 picture which is like, again, more distorted. It's already been like there was a misconception, and then it got more distorted by all the events.

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So, after the 9/11, there was a surge and influx of journalists coming into the region, and they all came with some sort of an idea in their minds formed that this is -- whatever their idea was -- but it was like a terrorist plan, oppressive regime, people who are not allowed to talk, women are not allowed to dance, or drive, or some of these things might be right, and I'm not saying and I'm not defending anything, but the thing is those people, like, when they come in, I expect them to come with an open mind, to see what everything in reality is. I mean, like it's a different culture all together, and it's really the wrong approach to come into the country expecting to find your own reality there because it's basically not true, it's not right. So, some of these journalists actually like media people, some of them came with an open mind actually to understand what is Saudi Arabia, what's happening there, why is the conflict actually. On the whole, there is also a sort of negative. I have to say, even with those people who are trying to be objective, they were trying to reach out, trying to understand, but most of the outcome was negative. And at the end of like maybe three years of visits from everybody -- like, you know, we had to go through I don't know how many visitors in Saudi Arabia, and we have to explain every time that we are normal people, which is normal, whatever. We have bad things, we have things we're not very proud of. We have things we are proud of. But the thing is, we are different but we are normal. I mean, you don't expect us to be American really, but we are Arabs, we're Saudis, and that's a point you have to really understand. Actually, I had liked to quote a writer who wrote in Al-Haya newspaper. He said that after 9/11, "a whole intellectual industry has sprung up in Western think-tanks, university departments, and among media pundits, seeking to dissect and understand the violence, hate, fanaticism, which the Arab and Muslim world is said to direct against the West". DR. GAUSE: You're not allowed to quote Al-Haya here. (Laughter.) MS. MISHKHAS: I believe in the freedom of speech. (Laughter.) But the complex arena really gives you an image of what's happening as all those people have started thinking about this area and have started trying to dissect it and trying to understand it, but the thing is they never really tried to understand. People came with some conceptions, they left with them. I remember an American journalist at the Christian Science Monitor. He came to us at Arab News, and he was talking to us and he was asking about women journalists at Arab News, and whatever, like he would get some good impression about the work we do. And he said he was going to write some article about it. So, later on he came back and asked -- and after it came out, he said, "No, actually my editor wasn't interested, he said he wanted something different, he wanted something more,” the usual stuff people write about Saudi Arabia. I was disappointed. I guess this is the way things were and how they work, actually. I think now we just have to face this question, how can we change this. What are we supposed to do? I think we are also to blame because we are never open enough for the outside world. People are not allowed to come as much as they want to see what Saudi

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Arabia is about. We are sort of a very private society, so I think that also might not help a lot of people to understand what sort of place it is. But I have a few suggestions, and actually beliefs, and I believe that as a starting point both sides have to be open to a new conception of the other, and there has to be effort on both sides, if not to accept each other's point of view, at least to try to understand what the other is. As Dr. Fandy was saying, take the country as is, not as we wish they were. This is only like a small step. Maybe this is what could be the beginning, and of course that means also that the Arab world has started to think about changing, the people of Saudi have to start to rethink what they think of the West and the Americans, and what sort of stereotypes they have. Dialogue actually was proposed by many institutions, by many countries, and it seems to me the only way out of the situation right now and try to create a better understanding. Okay, that's it. (Applause.) MR. AL-DABBAGH: Thank you. Dr. Gause. DR. GAUSE: I'm going to stand up. I'm a college teacher, I can only think on my feet. I was introduced as the Director of the Middle East Studies Program at the University of Vermont and that's true although it's a little bit like being the Prince of Liechtenstein. It's me and a guy in the History Department. (Laughter.) I don't think that the relationship between the United States and Saudi Arabia can stay the same. One of the reasons it can't stay the same is because more people on both sides of the agenda, on both sides in Saudi Arabia and the United States, are interested in it. This is not a relationship that can any longer be conducted purely at the elite level, that I think just the attendance today at the talk is a signal about. But it is also not supportable anymore, the old way of doing things because, as Ms. Pletka pointed out, there's a very widespread belief in the United States -- and we could argue whether it's correct or not -- but it is extremely widespread -- this is not a neocon thing, you can read it in Tom Friedman, you can see it in the remarks made during the election by the Kerry campaign -- there is a widely held belief in the United States that the domestic political organization, the political processes in Saudi Arabia -- and a lot of other countries, but particularly in Saudi Arabia -- are a major cause of what happened in the United States on 9/11. Again, I say one can argue whether this is correct or not. One cannot argue the fact that this is a widely held view in the United States across the political spectrum. That's what's new, I think, in the post-9/11 atmosphere but the old stuff is still there. The old interest that kept that elite relationship together and very, very strong -- although we tend to exaggerate the lack of problems pre-9/11, I think Rachel and Joe McMillan made very good points that this has never been a simple relationship -- but the interests that bring us together are still there -- there's oil, the regional politics. The new interest in the war on terror also at some levels brings us together and at some levels divides us. So, where can we expect cooperation? I think that we can expect cooperation because it's in the mutual interest of the two governments. I think we can expect cooperation on the military front. I would point out that the ten years between 1991 and 2001 were unusual in the U.S.-Saudi relationship, in the highly public military security cooperation

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between the two sides. And the Administration has moved away from that basically because the troops stationed in Saudi Arabia during that period were troops that were flying Southern Watch, and with the fall of Saddam Hussein's regime you don't need Southern Watch anymore. But it does seem that I think that the Administration is moving to get back to the pre-1991 sense of military cooperation -- training, facilities, access -- but without any kind of high profile American military presence there. The American military presence, besides Iraq, has moved, as Mamoun pointed out, to the smaller Gulf States along the coast, which have a longer history of accepting foreign military presences. Oil is an area where we still continue to have common interest, although not complete overlapping, largely overlapping. Here, I think, Saudi Arabia is going to have to move faster to increase its production capacity if they are going to continue to play the role that Rachel mentioned as the central banker of the world's oil market. It's costly to do this. It's costly to maintain surplus capacity, and the Saudis have paid that cost in the '80s and into the '90s, and paid a significant amount of money for that, but it is the price that Saudi Arabia pays to maintain that role, to maintain its role, that makes it valuable to the rest of the world, that makes it a centrally important responsible actor in trying to maintain some kind of stability in the world oil market. Saudi Arabia, I think, has to move on that and move more aggressively than the Oil Minister has recently announced. The war on terrorism. The Administration, I think the Bush Administration has done a pretty good job on this with the Saudis. It's pushed Saudi Arabia on the police front, terrorist financing issues, on taking seriously the presence of Al-Qaeda in Saudi Arabia. It's pushed it to move against the Bin Ladenist interpretation on the ideological front, to use its own Islamic networks and its own religious establishment to de-legitimate the Bin Ladenist interpretation. It took a while to get the Saudis around to that but certainly by 2003, and particularly after the May bombings, I think that there's a lot more commonality in the two governments' approaches to how to deal with the war on terror. Al-Qaeda in the Arabian Peninsula is a factor in Saudi Arabia, although I think that they are on the run, to some extent. There are a large number of Saudis who have answered the call to Jihad and Iraq against the United States and against the new Iraqi government. But what took two decades to develop in the kingdom, what Mamoun called this potent Molotov cocktail of an ideological mix, in which traditional Wahhabism played some role but certainly not the only role -- and I would argue probably not the major role -- but it took two decades for this to develop in Saudi Arabia where, frankly, to put it bluntly, Jihad was cool. Jihad was something that was incredibly positive. Jihad was something that was encouraged in the 1980s, of course, by our government, too. Lots of people were in on this, on the beginning of this development of Jahadist notions in Saudi Arabia, and the experience of Afghanistan I think was incredibly important here. What took two decades to develop is not going to be reversed in two years and that has to continue to be looked at and the United Sates has an interest in how Saudi Arabia deals with it. On these things that I think we have common interest, I don't think cooperation is going to be that hard to achieve. What to me is more serious and more important is that if the relationship is going to continue given these parameters I've set out, each side is going to have to live with things about the other and live with things that the other says that it does not like, if mutual interests are to be realized. I have two on the Saudi side and two on the American side that I'll just throw out. On the Saudi side, the Saudi leadership is going to have to live with the new

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interest that the world, and particularly the United States Government, has in their domestic politics. There is just going to be a higher level of scrutiny and there is going to be more public criticism, there just is. It's already here, we know that. I think the Saudi government is going to have to learn to see this not as some kind of covert effort to destabilize it, which I think is the first reaction of many people at the top levels of the Saudi government when they hear that criticism is, "These people are out to get us," and they are going to have to have a change of mindset here if the relationship is going to work. I also think on the Saudi side, people and interests in Saudi Arabia are going to have to accept the notion of Wahhabism in one country. The global network of Islamic institutions built by Saudi Arabia with oil money in the '70s and early '80s became, as we now know, in some parts -- and I would argue, without the knowledge of the top leadership of Saudi Arabia -- but became a conduit for the development and the spread of the Bin Ladenist interpretation, ideologically in terms of recruitment. We know that and the Saudi government has recognized this with such public steps as closing down the Al-Halomein Foundation. But even with the new oil windfall that's come in the last few years -- and given trends in the world oil market, one assumes will continue as relatively high oil prices compared to the past -- Saudi Arabia is going to have to keep Wahhabism at home as it reformulates itself, as traditional state Wahhabism in Saudi Arabia reformulates itself to take on the challenge of the Bin Ladenist interpretation which has become popular in some quarters in Saudi Arabia. I think that the Saudi state and the religious establishment have taken some positive steps in this direction. You could look at the English language insert in Asharq al-Awsat today that was put together for this meeting, and see a very interesting interview with Sheikh Abdul-Mohsen Bin Nasser Al-Obeikan, who is one of these people who's trying to take on the Bin Ladenist interpretation from all kind of classical Wahhabi theological jurisprudential standpoint. But I think that Saudi elites, particularly in the religious establishment, are going to have to understand that there is going to be opposition to the notion that the Wahhabi Dawaa can spread the way it did in the '70s and '80s without challenge. But on the U.S. side, we're going to have to accept a couple of things that aren't going to sit very well with us, frankly. One -- and here I part company with Ms. Pletka on this -- democracy is not the answer. It's not the answer. Political currents in Saudi Arabia are such that democratic elections would produce governments that would be hostile to American interests, and I think hostile to American values, too. One looks at the very modest electoral experiment of municipal elections, and it's not that people don't know how to organize. The Saudi current organized really well, which is why they won. Are they a majority, the Saudi population or the Saudi voting population? I don't know, but they are certainly the best organized. Safo-holili, who Mamoun has written about and mentioned, has in his writings criticized democracy as a Western importation and something not acceptable in a Muslim government, in a Muslim country. However, faced with the notion of elections, he behaved like a Chicago ward leader, and very effectively was able to organize his constituency and sweep the elections in almost every one of the major Sunni cities Saudi Arabia. Let me just say, a reform agenda -- if democracy isn't the answer, the reform agenda that I think the United States should push has to tilt the playing field toward interests

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that are more consonant with good relations with the United States on a practical interest level, and perhaps our values also, although I don't think we're going to see an exact match up there. That's not going to be easy. I do think that we should self-consciously pick sides here. I think that we should make a big deal out of the three people who were just sentenced for putting forward the constitutional monarchy petition, even though two of them are not liberals, they are Islamists of one variety or another, but I think that anybody, as Ms. Pletka says, who talks about politics with words and not with violence shouldn't be thrown in jail. And I think that we should actually make that a higher profile issue in our bilateral relationship, but in a self-consciously hypocritical way. We're going to make an issue of the people who we think should be out there. Other people who get arrested who we don't like, keep them in there. I think also, the second thing the United States is going to have to learn to live with is the same thing that I mentioned in the Saudi context, which is Wahhabism in one country, on all sorts of social issues -- women's issues, religious pluralism issues. State Wahhabism in Saudi Arabia, with which we've lived for decades, is not consistent with American values. We've lived with that in the past. There hasn't been a problem for us. Can we continue to live with that? I would argue that it would be in our interest to do so, but there are other people in the United States who would now say because of that thesis about the domestic causes of radical Sunni-Jahadist-violent-extremist -- all the hyphens you want in there -- that because of that, the United States can not live even with the State Wahhabism with which we lived in the past, and that I think it is an extremely important question that will determine to some extent the future of U.S.-Saudi relations. Thank you. (Applause.) MR. AL-DABBAGH: Hussein. MR. SHOBOKSHI: Thank you. Being your 12th speaker of the day, I suddenly feel like Elizabeth Taylor's husband. I know what I'm supposed to do, but I'm at a total loss how to make it interesting, but I'll give it a try anyway. (Laughter.) I come to you from a very different Saudi Arabia, but I also realize I'm coming to a very different America. In 1983, I was attempting to attend a lecture at Oral Roberts University in Tulsa, Oklahoma, where I was banned, I later on discovered, because I had facial hair. But you know, I am banned from some events in my own country because I don't have enough facial hair. That was a wake-up call to me, and a very important wake-up call telling me what extremism looks like even if it doesn't fit the stereotypical one. The word "relation" and "relations" is used rather dramatically and regularly in describing the status of the Saudi-U.S. link. What kind of relationship do we have? Do we have a relationship between America and Saudi Arabia? Is it a secret relationship? Is it an official relationship? Frankly, I think it's a relationship built on hypocrisy for the longest time. All the complaints I've been hearing about all day have always existed. We have always been the Salafi-Wahhabi -- so many hyphens again to put -- but it was okay. It was acceptable because we were the good oil-security-anticommunist -- again, many hyphens -- guys. You were the infidels, the corrupt, the morally corrupt, blah, blah, blah, and we accepted you because you gave us oil, you gave us education, you treated our old and sick.

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But, again, the bottom line, it was a hypocritical relationship. We've never sat and seeked counseling to get rid of the problems that existed, and still do. This relationship has always been a government-to-government relationship; it has never been a people-to-people relationship. That is the core of the problem. Americans come to our country and sit in compounds isolated from the society. We stick in our own apartments or villas and bundle among ourselves and refuse to mingle in and network with the rest of the population -- the majority of the Saudis anyway -- and the same is true of the Americans who come there. It has never been a people-to-people relationship. Thus, the size of the problems that have been suddenly realized after the events of September 11th are of a great magnitude, but should not come as a surprise at all. I am struck and amazed at the lack of the centers that address the Saudi-U.S. relations, or chairs in universities that address this issue. We in Saudi Arabia have never even thought of that concept. I know there were some singular attempts to do such a project in the University of King Saud in Riyadh, but it has never taken place. Lack of interest, maybe, but extreme passivity is what I would like to consider. Look at the way the U.S. has perceived Saudi Arabia, like a big barrel of oil. You see the two most important companies in my country, Saudi Arabia, that had a relationship with a U.S. entity, and I'm addressing specifically Aramco, the national oil company, and Saudia, the national airline. Both were managed by American firms for the longest time, but because the interest, and I think the sincere interest, that Aramco had in the minds of Americans, much more effort was put into Aramco, and Aramco is by far a better example of a more efficient company than Saudias. Maybe the airline was not such a hot business as gas and oil was. You always go back to the intention of our Founding Fathers. I really think the Saudis should examine today the intent of our Founding Figure, King Abdul Aziz. We are very far away from what he had in mind. I think Saudi Arabia is a country, but it is not yet a nation. And until we achieve that, a lot of these ailments that we are talking about will be solved. We have not really addressed the issues that we face as Saudis, first of all, let alone as Saudis dealing with Americans, that we need to encounter head on and address them in the spirit of the Founding Father because I think he truly had a vision of a country and a nation in mind, and he had signed some of the really truly fascinating documents -- I'm not wanting here to compare with the Declaration of Independence -- these were the first documents that had a national identity in mind before it was even in fashion in the area as a whole. I think we need to relax a bit, Americans and Saudis. If I criticize what takes place in Guantanamo with the Koran, or if I criticize the uneven handed approach of the U.S. Administration as far as the Israeli-Palestinian issues, I'm not anti-American. If I criticize some of Rumsfeld's actions, does it mean I hate Toni Morrison or I hate jazz or I hate the Dallas Cowboys? It doesn't mean that. In Saudi Arabia we really need to relax. If I criticize (inaudible) or some of the doctrines in our schools, or even Mohammed bin Abdul himself, it doesn't mean I'm anti-Saudi. We really need to start addressing the issues specifically and with a bit of courage and trust. And, frankly, I would really like other countries -- France, Israel, England -- to take advantage of the beautiful process of scrutiny that the relationship between Saudi Arabia and the U.S. has gone through, and I think it will be for the advantage of Saudis and Americans at a later stage, but there is a tremendous level of scrutiny that has been taking

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place, still is taking place with an event like this, but I am disturbed by my colleague here, Danielle, when she says we need to allow voices of dissent that are living here, Saudi dissenters that are living here, to be heard. That is not the solution -- and may I remind you that Ayatollah Khomeini says hello -- look what's happened in Iran because of the belief of such a simple solution, bring him from abroad and let him take over a country -- things don't get solved this way. Lebanon, a case in point, look what's happening now. We just need to collectively -- collectively -- have a bit of a benefit of a doubt in what's taking place in both our countries. I think there's a lot of internal stutter in America today, a healthy one. You mentioned 15 of the 19, and there are 15 of the hundreds, I'd be willing to challenge that, but there are also a lot of good Saudis who are trying sincerely to build bridges with your country and improve their own country. Let's take a look at that. Thank you very much. (Applause.) MR. AL-DABBAGH: Thank you, Hussein. Now we will open the floor for Q and A. I was told that we need to wrap up this session by 12:30 sharp, so please be brief and identify yourself as you please. MR. COHEN: I am Ariel Cohen, with the Heritage Foundation, Senior Fellow doing energy security. It is obvious from this panel and from all the literature that the relationship, strategic relationship between the U.S. and Saudi Arabia took a tremendous hit on 9/11, there's no question about it, no doubt about it. My question is, if this relationship deteriorates further, can the Saudi kingdom afford to divest from this relationship and develop a new relationship? There is a tremendous thirst for oil in China. There is increasing demand for it in India. Europe is sort of stagnant, but it's still there. Can you envision a future in which this relationship fades away and is replaced by other relationships including China, India, Europe and the Middle East, greater Middle East? Thank you. MR. SHOBOKSHI: Well, you're thinking of the question here "instead of", I'd rather answer it "and". We can have a relationship with China and the United States. We can have a relationship with India and the United States. It's not "instead of". And the Saudis -- and I'm speaking about the people of Saudi Arabia here -- realize that a partnership with America has more weight and more significance to their own benefit and to their own quality of life directly than it would with a China or an India. They realize there is a lot of added value that comes with this relationship, but at the moment they also realize there's a lot of baggage that comes with this relationship. Again, this baggage comes because of the lack of sincerity and openness that has existed for the longest time. DR. GAUSE: I think there already is thinking along these lines. When the Saudis were looking for surface-to-surface missiles, they didn't come to the United States in the '80s, they went to China. And I think that the big issue for me is whether the expansion of Chinese power which will inevitably have a Middle East component to it because of energy issues is going to be seen in Beijing and Washington as a competitive relationship or rather

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it's going to be seen as a commercial economic issue in which there's the two -- strategic adversaries is the wrong word -- strategic rivals can have some kind of motives with ending, and I just don't know. I just don't know how the U.S.-China relationship is going to develop, so whether we in Washington will see Chinese inroads or what we would think of inroads into the Gulf region as hostile to us, or whether we would see it as just another thing. I mean, the Chinese are building a big port at Gawa on the Pakistani coast near the Gulf. I mean, they are interested in the region, without a doubt. MS. PLETKA: I think that it's a very viable suggestion for the Saudis to make relationships outside either and/or, and I think the Chinese are very alive to those options, extraordinarily so. But that assumes that everything can remain static and we can insist on what we insist on and walk away in a huff if we don't get it, and that the Saudis can go looking elsewhere and make friends where they need them, and that everything can continue happily along in the status quo in Saudi Arabia and without any implications whatsoever for the stability of the country. There's not a single outfit out there, including the Economist Intelligence Unit, the European foreign ministries, European intelligence services, there's no one out there who believes that the status quo in Saudi Arabia is sustainable, and that means that there are genuine implications for whoever wants to walk down the lane with the Saudis instead of the United States. MR. AL-DABBAGH: Thank you. MR. MIYAZAWA: My name is Mike Miyazawa. Ms. Mishkhas, your remark on the recent Newsweek report on voting woman and dance is very interesting. I guess you are trying to illustrate U.S. penchant for judging everything around the globe using American standard or American yardstick. You just got started and the time was up. If you have more examples that you have prepared for this presentation, would you please let us know? MS. MISHKHAS: Well, I think there's lots of examples, but the thing is I'm not here just to say like all these examples. My main point was that there isn't an understanding, and the voting thing was one point of it. People when they say these things, they don't even think that maybe in Saudi Arabia women are trying to get the voting right. Maybe they are trying there, fighting for that, and they don't even look at that side, they just look at another side that really appeals to them and feels more natural to them than what is really happening out there. MS. KRANTZ: My name is Barrie Krantz, I'm with ITOCHU International. My question is for Danielle Pletka. You talked about how the current Saudi situation is unsustainable and talked about some reforms that you suggest take place. I'm wondering if you can look maybe ten years into the future for us and offer us your idea on some maybe alternative scenarios on what the Saudi situation might look like both in terms of governance and broader Saudi society. MS. PLETKA: I think Professor Gause actually made some important points. When you look down the road, I think that is tempting for some, as they advocate change, to advocate change and do what is fondly in political science called "mirror imaging" -- I guess

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in psychiatry as well -- and he was absolutely right. If these are our expectations, they are foolish. We cannot expect and hope that all countries that undergo democratic reforms and economic reforms will look just like us, and we should expect that if there are those kinds of reforms, particularly on the political side, that they can well breed anti-Americanism. There's a great debate among people who look at Saudi Arabia and who agree on the unsustainability of the status quo as to whether there is long-term sclerosis and that we will move successively from one member of the royal family to another, liking some more, some less, but not expecting any major changes until eventually perhaps someone will come along who will change things, or there will be an outside actor who does it, and that is certainly one scenario. I think a lot of the ingredients are there to make that untrue for ten years down the road. I guess what we have to ask ourselves is if a process begins -- and a process is what you really want. You do not want things to open up instantaneously. You do want to remember that elections are the culmination of a democratic process and not the beginning of a democratic process. What you ideally hope for is a diversity of opinion. Yes, I think that there probably are very well organized in Saudi Arabia, but that's because they are the only people who had any scope to organize themselves through mosques and elsewhere. We don't know what else is out there. It is very hard for me to countenance the idea that there were two political views in Saudi Arabia, Solecism and belief in the monarchy. I think there's a great deal else out there, and I don't think people are allowed the scope or the openness that is necessary to actually develop that. So, what will it look like? I don’t think I have any idea what it will look like, but the one thing that we can be certain of is that if these opportunities exist, we can't be promised a pro-American country, we can't be promised a whole variety of things, but we can be promised that democratic countries are far less interested in the kind of destabilizing activities, the kind of weapons procurement, the kind of problems that non-democratic countries currently have. So, that would be what I would hope for just from an American perspective. MR. LIBEN: I'm Zachary Liben from the Gulf Institute. The Saudi government, especially the Foreign Minister Saud al-Faisal, has criticized what is called marginalization of Sunni Arabs in Iraq, but at the same time Shiite Arabs in Saudi Arabia are not given the same type of proportional representation as all the Sunnis in Iraq. I believe 17 out of 475 Iraqi Parliament members are Sunni whereas 5 out of 150 members of the council in Saudi Arabia are Shiite. Do you feel this statement is hypocritical, and do you agree with this statement, and when do you feel that Shiite will be represented in the Saudi government? MR. SHOBOKSHI: What you said is true, obviously. There is a lot of talk in the Saudi government itself. They have brought out in the open and brought it on the table. There is a sense of realization that the representation of various boards in the government or semi-government need to be representative of everybody in the country -- women, minorities, what have you. I have a question about your numbers, but that's another story. I don't think they are accurate. There are many voices within Saudi Arabia asking for reform from a qualitative point of view and a quantitative point of view. It's not atypical at all. Prince Saud Al-Faisal had and other ministry officials in Saudi Arabia and non-officials have addressed

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that issue. It's not any longer vague now. This is talking the talking. The next step hopefully will be when Saudi Arabia will take some steps to address these issues by hopefully allowing people to be appointed, and I think this will come. QUESTION: My question is for Ms. Danielle Pletka. I've had the privilege to listen to Ms. Pletka several places that I find that you have that applies for all countries, for Syria, for Iran, for Saudi Arabia as well. Isolate their regime, look for dissidents abroad, and do something about it. But I just wonder what is your vision on the effect of that on the oil market, for example, in the short-term? I mean, are you envisioning somewhere of a permanent war solution in our region to serve U.S. interests, I mean, if it's the same thing everywhere? MS. PLETKA: When the cliff notes versions of my talks gets written I am not going to put you in charge. I think I spoke at length at the outset and we know each other well. I spoke at length at the outset about what is necessary to happen at home. I actually don't believe that embracing external dissidents is either an ideal way of going about the business of promoting openness in a country, nor do I believe that it is necessarily terribly effective. Sometimes it's the only option you have, and that's not what we've done in Lebanon. That's not what we've done in Egypt. That's not what we've done in a whole variety of other countries that aren't in the Middle East, to the contrary. What you saw the United States do vis-à-vis Ukraine was certainly not promote outside dissidents. I don't think that there's a "one size fits all.” But there are certain totalitarian states -- and I don't consider Saudi Arabia a totalitarian state -- but there are certain totalitarian states where dialogue with dissidents is impossible because they are all in prison. And at that point, you do have to recognize that with some discernment you may need to talk to people on the outside, but you cannot say "it's all right, they are all in prison, I stand defeated, why don't you just go back to being the dictator you enjoy being and we won't worry about it." That's not really an option. So, where there are places to work with people -- and I think we should work with a whole variety of people, not just people who agree with us, not just people who think everything in Guantanamo is great, not just people who think that Don Rumsfeld is a god, but in fact a whole variety of people of different ideas. That is what we ought to do. I think that is the right idea. As far as the impact on all markets, well, I think we spent 50 or 60 years worrying about that, and it didn't serve us all that well. Yes, we take those considerations into account. Yes, we live in a world of reality. But as you know, in that world of reality, it's always good to have people who promote ideals, and that's what I try to do. MR. AL-KHALIL: Thank you, Mr. Chairman. I just would like to mention about reform in education because Danielle mentioned about the educational sector. I am saying this -- first of all, my name is Khalil Al-Khalil. I was speaking before. About the reform education in fact has been a major concern to the professionals of Saudi Arabia, I am one of them. I have been teaching education in the university for many years. I am a member also of the National Council for Educational Development. No one in Saudi Arabia, those who are professionals are happy with our educational system in certainly the kingdom of Saudi Arabia. We are not happy with the educational system. It has been

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incapacitated, has been for a long time, and we are determined also to change it. And in fact we found out that the problem is there is no one in the government to change it, but there are many issues related to help respond to the needs of the people. We can't really go to just an importer for a system and bring Rand Corporation or bring other corporation to just fix our education system, and therefore we would like to see some change in education that will be working and will be responding to the needs of the people. The government has been issuing or establishing in fact a High Commission for the change of the education system, and that commission has been given free hand to change everything. Let me say this to you, that I think in probably two to five years the education system will be changed completely, the change is very comprehensive and almost radical, and that's what the Saudi population wants and we appreciate any comment comes from outside. We are not really very sensitive of others when they criticize our system. We welcome it as professionals and in fact, we seek also any expertise or whatever comes from others, we are willing to accept it. But, again, I would like to say very competently that our education system is in the way of change, and hopefully the change will be coming soon. MR. McMILLAN: I'm Joe McMillan, from National Defense University. All the panelists seem to be agreed that Saudi Arabia needs political reform, and everybody seems to agree that plopping Western style democracy immediately in is not the way to get it. I wonder if the panelists could comment on what kind of elements of Saudi political/social/culture might be used as starting points to develop a truly Saudi participatory system. I've always thought of an independent judiciary, relatively independent judiciary, as one of the positive parts of Saudi Arabia that was actually singled out as one of the few good parts of the Saudi human rights report that came out last year. So, Dani may want to enlighten me on the nature of the Saudi judiciary on that point, but I wonder what other aspects of Saudi politics might be used as starting points to build something as a basis for change. MS. MISHKHAS: I think one of the major points that start this development is trying to involve women more into like decision-making and into all sorts of political activities in Saudi Arabia. I mean, it's no secret that until now that women are not represented in any way. They are trying to get more rights. They have been getting more actually, there's been slight improvement, but there's still fighting to at least to get the vote to be part of municipal councils, to be in the Sura Council. And I think if the government takes the step of really using the capacity of Saudi women which are immense, there will be a good change. DR. GAUSE: I hesitate to disagree with someone from Saudi Arabia about women's issues in Saudi Arabia. Being a woman in Saudi Arabia, she knows a lot more than I do about these things, but I do get the impression that if there were a significant move to increase the role of women in the public life of the kingdom, that that could lead to a backlash among other more conservative, if you will, or factions who believe very strongly that there are religious limitations on the public role of women. I'd be interested to hear from Saudis how you think that kind of possibility of backlash exists. I think on a number of issues -- I mean, there are a number of issues that

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have to be confronted before we even get to the point about a large increase in the role of Saudi women in public life, like being able to drive and things like that. And there I think the government could just do it. If it had the will, it could just do it, and it could package it as an economic issue. I mean, how many drivers are there in Saudi Arabia right now? They are all foreigners. They repatriate most of their earnings, or a fair amount of their earnings. Talk about balance of payments issues -- well, not with oil $48 a barrel -- but balance of payments issues on this score. But I would like to hear from Saudis on the risk of backlash on that. My reform agenda, for what it's worth, I think you can give the Sura, the consolidative council, a larger role in the monitoring of government ministries and activities, use the Sura as the vehicle to increase transparency within in terms of the finances of the government, and I think that that would be something that would be a good thing. I think these municipal councils -- we don't know what they're going to do. We don't even know what their powers are going to be yet. This is a big experiment. But I do think that the municipal councils can perhaps be a vehicle as they develop to increase -- to introduce a bit more pluralism into Saudi society, particularly in the Eastern Province where there are, of course, areas of the Eastern Province that are Shiite majority, and in the municipal elections those council spots were swept by Shia, Kotrif and Afsa, and I think that that can be a vehicle through which some amount of pluralism -- not a huge amount, but some amount of pluralism, and perhaps religious tolerance can increase in the region. I mean, right now the elections didn't increase religious tolerance, and my understanding of what happened in the Eastern Province is that there were pretty serious and tense relations between Sunni and Shiite and places like Damam where there sectarian -- basically, the elections came down on sectarian issues, but perhaps with more and more local officials from the Shiite community in these councils, that can be a stepping stone to greater pluralism in Saudi public life. MR. SHOBOKSHI: Just a quick comment on what you said. In post-Nazi Germany, the Germans decided to take a stand and to cleanse their textbooks and their media from various poisonous ideas, basically. The Saudis are going through that today. They are really examining a lot of false ideas, books that existed for the longest time as the truth. And to a great deal, a vehicle like this was responsible, Asharq al-Awsat, and many media. We really need to start realizing the value of media and liberalizing it more, and allowing more voices of dissent or agreement to appear in the society. We need to invite all Saudi money that has invested abroad in various media ideas to come home and broadcast from within and record from within, and so on and so forth. This is an area that we have been dealing with in a very shy way, but we need to start addressing it. I disagree with my colleague, Dr. Khalil, educational reform has a lot of opposition in Saudi Arabia, or it would have been done. However, the process is ongoing. What type of education is the issue, it is not the reform. A lot of people want education reform, but the end product, what does it look like or feel like? And I beg to differ, there is not a unified Western version of democracy. The Scandinavians would beg to differ. I was visiting Freedom House yesterday. I think the U.S. was ranked 17th in an index they had, in a democratic index that they had. Scandinavian countries were ranked higher. So, we are still learning. There is no straight answer to Greg's question, but there are various pieces of the puzzle that need to be fit together, and we need to address these

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issues universally, with a great level of a benefit from both parties, i.e., whomever is interested in Saudi Arabia and the Saudis themselves. We are right now at a fork in the road, it depends which direction we are going to take. There are enough voices that want to build a better Saudi Arabia, a wiser Saudi Arabia, a more accommodating Saudi Arabia. I don't have the numbers, that's why I beg to differ with any percentages or number, they are not accurate, unfortunately, but I know there are a lot of Saudis who are onboard to build a better country. MS. PLETKA: Just two things, Joe, because I wouldn't want to end the conference without responding to you, I know you would be disappointed. First thing is I'm not a fan of a judiciary that imprisons people for disrespecting the constitution and on false charges of bootlegging and things like that, but I guess that's independence of a sort. The second is that what you just heard is a wonderfully hopeful thing. There are people who want it, there are people to work with. They need to be given the room to breathe. We shouldn't fool ourselves for the great search for authenticity and not move forward until we find an authentic Saudi way to do things. I remember somebody saying to me, "Can't the Iraqis just do some sort of loya jirga thing.” They'll know what to do if they have the oxygen to do it, and that's one of the things we can be confident in. Thank you. MS. MISHKHAS: I'd like just to say something about the conservatives who are not very happy with women getting more chances. The thing is I have to agree with that, but then there's another factor, we are fighting against that. Now you can see in Saudi Arabia women who are trying to -- like some women nominated themselves for the municipal elections before even the men started, and they came up with platforms, they did all sort of interviews. Okay. At the end of it, like it was in three weeks, they didn't go through because of the conservative stream that would not allow women to go for. But I think with more events like these, with more women coming out and trying to prove that they can do the job and with the government's help, which we need really, I think maybe the picture will be different in the future. MR. SATLOFF: Bob Satloff. Greg, you gave a very interesting paradigm when you suggested that one option might be to promote one Wahhabism in one country, but then you suggested that the Saudis will also have to recognize that they will get a greater scrutiny of their political life. Now, if we promote Wahhabism in one country, and mainly getting Wahhabis out of every other country, what would be the reaction of the religious conservatives inside Saudi Arabia? Will they therefore seek to strengthen their hold of influence inside Saudi Arabia, and how will the royal family view this relationship between the religious elite and themselves and their hold on power? One would imagine that there's a tradeoff, that Wahhabism in one country means sacrificing the people of Saudi Arabia to greater religious control by the religious conservatives. Would that be the equation you would think would transpire? DR. GAUSE: We don't have to promote Wahhabism in one country if it's there and it's been there for a while. But, yes, I mean, I think that's a live tradeoff if you're looking

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from a point of view of American interest. I mean, to me, the debate now, the interesting debate in Saudi Arabia, or one element of it, is within the religious establishment, within the religious tradition there are people challenging it, but then you have kind of -- for shorthand, I'll call it "State Wahhabism", which has always made its peace with the regime because it sees the implementation of its version of Islam -- socially extremely conservative and puritanical, et cetera -- as being tied up with the political fortunes of the state. They can't exist without a state. I think that that was one of the big things about the original deal between Mohammed Ibn Abdul Wahad and the Al-Saud, is that he saw that his version of Islam could not exist without a state, whereas now we have a current of religious thought which Bin Laden is the most out-there version of, which basically is in many ways more politicized than traditional Wahhabism, which was always subject to state authority. And it seems to me that the big debate as to whether you could have Wahhabism in one country is whether that state Wahabbist inclination supported by the authorities in Saudi Arabia is going to be able to win the battle of ideas versus its own critics who argue "no, this is a transnational call, that we exist in opposition to the government, or in tension with the government as opposed to as a support for the government,” and if that state Wahhabist inclination wins, yes, there are going to be tradeoffs that the regime will make, as it has always made. I think it will be in areas that we will find offensive, whether it be in women's issues, whether it be in terms of religious freedom, two issues that are increasingly important in our foreign policy. I don't think that we're going to see what we would like, but we might see a reduction in the role of Saudi Arabia as a vehicle for recruitment and support and ideological justification for solitary Jihadi radicalism. And maybe that's a tradeoff I'll make. MR. AL-DABBAGH: Thank you. Well, with this remark, this brings our session to an end. Please join me in thanking our distinguished panelists. (Applause.) (Whereupon, at 12:30 p.m., the conference was adjourned to lunch.)

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LUNCHEON KEYNOTE ADDRESS (1:15 p.m.) DR. CRONIN: Good afternoon. If I didn't greet you this morning, let me do so this afternoon. This is a great turnout at a great conference. My name is Patrick Cronin, and I'm the Director of Studies and Senior Vice President at the Center for Strategic and International Studies, which is co-sponsoring this conference, and we are delighted that we've had a great discussion this morning on some critical issues about the U.S.-Saudi relationship, but we've really been working up to this keynote address, this moment here this afternoon. I want you to please continue with your dessert and coffee or tea, and I want to just give a few words of introduction here for our keynote speaker who is taking time out of an extraordinarily busy schedule to come and join us today for this important topic. Our keynote address will be given by Dr. Philip Zelikow. As you know, he is the Counselor of the Department of State, and has been so since early this year. He is more than that, something that can't show up in a job description, a truly trusted member of the inner circle of the seventh floor, of Secretary Rice, and beyond that at the White House and throughout the Administration. He took this post on the heels of an extraordinarily successful Staff Director leadership role of the 9/11 Commission. That Commission has now become "the" model for commissions. As somebody who is just finishing up work on a commission, it is a model that you cannot reach. He has now raised the bar a great deal as he dealt with very diverse commissioners, a very big staff, but he more than that helped to envision what could a 9/11 Commission report look like? What problem are you trying to solve? What should it look like? And he was just instrumental in making this report now the highest standard commission product. His career is remarkable and he has really gone back and forth between public service and academe. He was a trial lawyer in Houston, but he was a Foreign Service officer overseas, although I'm told he may never have finished a complete tour of duty because he was such a hot commodity that the Secretary of State or the President would want to bring him in and have him troubleshoot yet one more high profile urgent matter of business. So, he worked closely with Secretary of State Baker and President George Herbert Walker Bush, President 41. He then left the Administration and went to the Kennedy School at Harvard University, as an academic and then was lured away eventually to Charlottesville, the University of Virginia, where he took over to run the Miller Center. Having taught at the University of Virginia, I can tell you that it used to publish a lot of books, but not always of the highest quality. Since Dr. Zelikow has been there, it's published a lot of good work of an extremely high quality, and that's really a tribute to him, including a fascinating series of publications, for instance, which you should look at if you haven't, based on the Oval Office transcripts and deliberations. His attributes are many, but I guess what is most impressive to me is his consistent intellectual energy to every job he's ever had, and the one that he has now in particular, his willingness as well to speak up when the moment is right, and we hope in this context of this conference that the moment is right because he has been asked to address the future of U.S.-

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Saudi relations which, as we know from all of you this morning, a very delicate, sensitive, difficult issue, and yet one that is changing. And so we could not ask for a better speaker than Dr. Philip Zelikow. Please greet him. (Applause.) DR. ZELIKOW: Thank you for that very gracious introduction, very hard to top that or follow up to it. I also want to thank the Center for Strategic and International Studies for making this occasion possible and inviting me to attend it. Jon Alterman, who has been working at the Center, is an old colleague of mine from Harvard where we first met, where we were both doing historical work on the Suez Crisis of 1956. I want to thank Prince Faisal Bin Salman who has helped to host this event, and thank all of you for coming here. I was invited to talk about U.S.-Saudi relations. I will do that, and then pursue some of the broader themes opened up by that subject. Since King Abdul Aziz and President Roosevelt met on the U.S.S. Quincy 60 years ago, the United States and Saudi Arabia have shared a close and intensely personal relationship. This continued through the decades, and most recently manifested itself at the April summit between President Bush and Crown Prince Abdullah in Crawford. Americans are deeply bound up in the modern history of the kingdom. Saudi Arabia developed its energy resources in close partnership with the United States. Thousands of Americans contributed to the development of the kingdom's energy and economic infrastructure. It's possible that one or two of them are sitting here today. And thousands of Saudis came to the U.S. to take advantage of our world-class education system, and I expect it's possible that one or two of those are here today, too. As the holder of approximately one-quarter of the world's oil reserves, the kingdom is obviously important to the United Sates and the rest of the world. In the Cold War, the kingdom was anti-communist, so the two countries often shared common cause. In the political struggles in the Middle East, the American and Saudi world views were quite different, yet the kingdom cared little for the secular, socialist and nationalist ideologies that were so fashionable from the 1940s to the 1970s, and its rulers generally sought peaceful solutions to local problems. So, again, our two countries often shared common objectives. In the 1980s and 1990s, the kingdom faced the challenge of great wealth, rising responsibility, and deadly challenges to its rule and legitimacy, including its religious legitimacy, from countries such as Iraq and Iran. The American relationship intensified at the top, cemented by experiences like the common effort to oppose the Soviet occupation of Afghanistan, and the first American-led alliance against Saddam Hussein's Iraq. But in a way, our societies did not really know each other very well at all. The kingdom is one of the most religious and socially conservative societies in the world. On the other hand, America is an open society that encompasses communities and beliefs of almost every description. Americans did not understand Saudi society, and often what they did understand they did not like. For their part, many Saudis were and are deeply conflicted about American in both high policy and ordinary society. They are attracted to some aspects and they are repelled by others. So, the relationship, even as it became closer, was conducted mainly behind closed doors. Saudi and American leaders did not find it to be in their political interest to publicize their dealings, including the often constructive role the kingdom played in supporting the

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Middle East peace process. The relationship thus naturally became an object for suspicion and mistrust. Then came September 11th. The 9/11 Commission found that, ”At the level of high policy, Saudi Arabia's leaders cooperated with American diplomatic initiatives aimed at the Taliban or Pakistan before 9/11. At the same time, Saudi Arabia society was a place where Al-Qaeda raised money directly from individuals and through charities. It was the society that produced 15 of the 19 hijackers.” There is much more in that report and some of the specialized staff studies we produced that discuss Saudi Arabia, the kingdom's choices during the 1990s, and the world that produced 9/11. As the former Executive Director of the 9/11 Commission, I played my part investigating and trying to comprehend that world. The report speaks for itself. There is no need to recapitulate it today. After 9/11, many Saudis at first simply could not believe what had happened. That denial took various forms. As the truth became evident, denial then gave way to many reactions, including self-examination. Was their vision of Islam truly peaceful and inclusive, or was their society being taken over by the "TUK theory". "TUK theory" is a term perhaps that requires a little explanation, so forgive me a footnote. Academics offer footnotes. It's a term that I believe is of Egyptian derivation having to do with an Islamist movement in Egypt in earlier years that was imported into Saudi Arabia as a term to describe people whose form of Islam they regard as so pure that those who do not hold to their particular form of pure Islam they brand as heretics, worthy of excommunication, considered apostates, the gravest of all possible charges to a religious Muslim. So, when Saudis encounter such zealots, they sometimes use the word I found of "TUK theory", and so you come back to the question Saudis ask themselves, was their vision of Islam truly peaceful and inclusive, or was their society being taken over by the TUK theory. The kingdom redoubled its commitment to fighting Islamic terror. Now the terrorists hated the kingdom's rulers, but left them alone as long as they could operate without substantial interference. When the kingdom truly joined the war on terrorism, the terrorists brought the war home. On May 12, 2003, Al-Qaeda launched a bloody domestic terrorism campaign against the Saudi government and against Western interests in the kingdom. The kingdom has been meeting this challenge. Saudi security forces have been fighting terrorists in gun battles, with new laws, and with strong political messages from the country's leaders. I have met with some of the people fighting those battles, at least one of whom was later badly wounded when the terrorists tried to kill him. The United States and Saudi Arabia have indeed become allies in the war against transnational terrorism. The May 12, 2003 attacks also underlined the urgency of Saudi Arabia's own domestic problems. Although Saudi Arabia is seen as a wealthy country, it faces major demographic challenges and societal factors that have fed extremism. The 9/11 Commission report and staff statements discuss these issues. Despite the current price of oil, Saudi Arabia has experienced steadily decreasing standards of living over the past three decades. With one of the world's highest birth rates, the kingdom has a burgeoning population of young people whose prospects are uncertain, passing through an educational system facing the task of preparing these young people for

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the modern and interdependent world of the 21st century. So, there are hard tests ahead. As our two countries look to the future, there we can find an open basis for U.S.-Saudi partnership, a partnership that leaders in both countries will be proud to explain and defend. We can build on the visions we have for the future. As the kingdom forms constructive plans, the United States can help. The State can no longer guarantee lifetime employment for young Saudis, demonstrating the urgency of economic liberalization that can turn the private sector into a more effective engine for job creation. WTO accession, which we hope can be achieved by the December 2005 Hong Kong Ministerial, will move in the right direction. The kingdom has made important progress. There are also political challenges in developing civil society and expanding citizen participation in government. Crown Prince Abdullah's national dialogue has been a notable development. It has opened more space to discuss issues. Curriculum development is another key area. To prepare young Saudis, while understanding that modern life requires a certain understanding for others, promoting moderation and tolerance. The United States is seeking ways to increase scholarship and exchange programs for Saudi students and educators. As the President has recognized, and I quote: "Sixty years of Western nations excusing and accommodating the lack of freedom in the Middle East did nothing to make us safe because in the long-run stability cannot be purchased at the expense of liberty. It would be reckless to accept the status quo." The President also noted in his State of the Union address that countries like Saudi Arabia and Egypt can and should play a leadership role in the Middle East in promoting change and building healthy societies, societies that naturally marginalize and reject violent extremism. We have said what freedom means. The President has called them the "non-negotiable demands of human dignity.” They include freedom of speech with a vibrant free press, a free economy to unleash the creativity of citizens and give them economic independence from the state, an independent judiciary to guarantee rule of law and assure impartial justice, religious tolerance, respect for women, and freedom of assembly so citizens can press for reform and so that a peaceful opposition can provide choices. But the President also stressed the freedom of others to choose their own path. The President also said this: "When the soul of a nation finally speaks, the institutions that arise may reflect customs and traditions very different from our own. America will not impose our own style of government on the unwilling. Our goal instead is to help others find their own voice, attain their own freedom, and make their own way." We recognize that change must come from within if it is to endure, and must be based on the strong cultural foundations of Saudi society. Nevertheless, we have seen the tragic consequences of deferring the process of change and others such as the series of Arab human development reports written by regional scholars have cataloged the costs incurred by economies and societies. The United States welcomed the holding of municipal elections in Saudi Arabia, which offers the opportunity for greater citizen participation in government, and greater accountability by government towards its citizens. It was remarkable to watch the energy and political activity opened up by even these limited elections. We were disappointed that women were not permitted to participate. The First Lady spoke in Jordan a few days ago about the part that half of Arab society can play in

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strengthening the whole. She used an arresting metaphor of a bird trying to fly with only one wing. Elections are important, and we hope to see them expanded in the kingdom. However, there are other areas the kingdom can consider. Political institutions independent of the royal family have provided only limited accountability or transparency. Institutions like the Shura Council could be strengthened and given greater independence. The local councils that have just been elected should have real powers, including over budgets. Through the Middle East Partnership Initiative, the acronym is MEPI, and our multilateral effort for the broader Middle East and North Africa -- there, the acronym is MENA -- get used to it, we're going to repeat it a lot. Deputy Secretary Zelet just described that initiative in Jordan in his address over the weekend to the World Economic Forum. And as he pointed out, the United States is working there to strengthen freedom, the democratic process, and good governance. We look to the high level committee that was established at the Crawford summit to provide overall direction and focus for an expanded dialogue. We support voices in the region, both in government and civil society, calling for change. We express our views both publicly and privately. In the case of three reform activists arrested in March 2004, who were recently sentenced to lengthy prison terms, we've already expressed our disappointment over those harsh sentences. These verdicts seem inconsistent with the leadership role Saudi Arabia should be playing in the Arab world. Saudis justly regard themselves as living in a land that has been blessed by providence. They are the custodians of the two holy sites. They live atop vast and valuable natural resources. They cherish traditions of family and honor passed down from generation to generation. This generation of Saudis has a chance to define the legacy they will now pass to their sons and daughters. And Americans, in turn, should respond with understanding. It is too easy to demonize or scapegoat Saudi Arabia because of the differences between our societies. The relationship must turn on the way we see the future based on mutual tolerance and mutual respect. The winds of change are also blowing elsewhere in the region. Egypt has the region's largest population and a tradition of political pluralism, women's rights, and a free market economy that predates any other in the region by decades. But it has been struggling for decades to throw off the closed political and economic systems that were its Nasser-ist legacy. The Prime Minister and young reform-oriented ministers who entered the cabinet in July 2004 got off to a quick start on economic reform, cutting tariffs, taxes, and subsidies, privatizing state-owned companies, and in general tearing down the barriers that have kept Egypt largely closed to world trade and investment flows. President Mubarak and Prime Minister Najib have gone on record as saying that the era of subsidized goods and services and government jobs for everyone who wants one is over, and that the private sector economy is the future of Egypt. We would like to see that economic opening matched by a political opening. In his State of the Union address this year, President Bush called on Egypt to lead the way to democracy in the Middle East as it has led the way to peace. Clearly, the Egyptian people also would like to see more political openness. Over the past year, in advance of scheduled presidential and parliamentary elections in the fall of 2005, there has been an increasingly public debate on the need for political as well as economic reform in Egypt. That debate fills Egypt's media, mostly

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opposition and independent newspapers, but also increasingly in the government-controlled media. It has spilled onto the streets in demonstrations by the Kytaya movement and others. It has been taken up by pillars of the state such as the judiciary. In February 2005, President Mubarak responded to those Egyptian calls for reform. He announced that he would seek constitutional amendment allowing for the President of Egypt to be chosen through a direct multi-candidate election rather than through a referendum on one candidate recommended by the Parliament, which remains overwhelming dominated by the ruling party. The constitutional amendment subsequently drafted goes to a national referendum May 25th -- tomorrow. We believe that constitutional amendment is potentially an important step forward. Its implementation over the next few months will obviously be important, too. We should not kid ourselves. There are still substantial barriers to political reform and human rights in Egypt. The emergency law in place since 1981 sharply limits the freedom of assembly and other civil rights. As our annual human rights report documents, it is still too difficult to register political parties and NGOs. Intimidation of opposition and civil society activists has been a long-standing problem, and human rights abuses by security forces particularly in the prisons are widespread, but that should not diminish the cause for optimism. Prime Minister Najib of Egypt, who visited here last week, told President Bush and the press that the government of Egypt is committed to holding freely contested and transparent elections. The Egyptian people and the international community should hold him to his word. The international standard for such elections is clear, it includes the right to freedom of expression and freedom of assembly; freedom of the press, and access of all candidates to the media; freedom of candidates, campaign activists and voters from harassment; strong supervision of the elections process by a neutral election body, and domestic and international observers. Freer, fairer and more transparent presidential and parliamentary elections that reflect the will of the Egyptian people could have a powerful demonstration effect in the rest of the region. In Egypt, they are used to measuring change by the passage of centuries. Yet, here again, visionary leaders have the opportunity decide what legacy they will leave to their children, seizing a historical moment. And in Iraq, the historical moment is at hand. Many freedoms are at stake in Iraq's political process, and we will assist the Iraqi government in protecting these freedoms. Polling data consistently show that the Iraqi people are optimistic and see their future as brighter than the past or present. When the Iraqi people voted on January 30th, they liberated themselves from their painful, tyrannical past. In defying the insurgents who seek to sow division and hatred through violence, millions of courageous voters said they wanted a united future. It is not for the United States or the international community to try and determine the details of this future. This is now a freely elected government in a sovereign nation. If Iraq asks the United States what freedoms we hold dear, what we think of as the demands of human dignity, the President has answered that question. And the process of writing that constitution matters, too. In both process and substance, the whole international community has a stake in an Iraq that is unified, with a governing structure that represents the views of all of Iraq's ethnic, religious and political groups. The Iraqi people, whatever their ethnicity, religion or political belief, suffered under the brutality of Saddam Hussein's regime. This shared burden can translate into shared

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reconciliation in which all Iraqis work together on democratic processes. We are encouraged that Iraqis are committed to that principle. It is now time to commit to the practice as well. Some might say that the President's forward strategy of freedom for the Middle East is idealistic. Earlier this week, my boss, Secretary Rice, re-emphasized that strategy and noted what it had already achieved. Putting on some of my old academic garb, I spoke at Stanford University earlier this month on the false dichotomy of idealism versus realism, and emphasized the Administration's commitment to a time-honored conception of practical idealism. The President summarized his doctrine best in his address last week to the International Republican Institute: "This is a period of great idealism, when dreams of liberty are coming true for millions. Yet, to achieve idealistic goals, we need realistic policies to help nations secure their freedom, and practical strategies to help young democracies consolidate their gains." Thank you. (Applause.) DR. ALTERMAN: Dr. Zelikow has agreed to take a few questions. Please wait for a microphone, and when you're called on please identify yourself and your institution. MR. AL-AHMED: Ali Al-Ahmed, Director of the Gulf Institute. I have a question regarding the communication that came after the meeting in Crawford. I noted that the paragraph talking about Iraq did not use the word "democracy", but used "United States-Iraq", but when it talked about the Israeli and Palestinian issue, it emphasized democracy and mentioned it at least three to four times. So, is there a hidden message in the fact that you removed the word "democracy" from the paragraph addressing Iraq? DR. ZELIKOW: There is no message at all. You have uncovered one of the vagaries of the process by which government documents are sometimes produced. QUESTION: Abdul (inaudible) from King Saud University. I have a question I want to relate to some of the remarks we had earlier on the panel. When it comes to talking about the stability of Saudi Arabia, what I have noticed here, that it has something to do with the American econometric tradition that tends to think of monarchies as unstable rather than being based on facts. I would like to hear what do you think of that in terms of sustaining long-lasting relationship. DR. ZELIKOW: Well, as a historian, I note that monarchy persists around the world in some astonishingly stable and durable forms. It's true that our country broke free from a monarchy, but we don't hold grudges that way. So, we have nothing against monarchy per se. Indeed, I noticed that many Americans go to Buckingham Palace every chance they go to London. There's nothing against monarchy per se. Some monarchies thrive and are durable, some are not. A lot, of course, has to do with the choices made by the monarchs. MR. HEKAL: I'm Bernie Hekal from New York University. I want to sort of probe a bit and ask you about if we were to have elections in a lot of countries in the Middle

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East and just as a fact that the Islamists will come to power in many of these countries, and what position -- I mean, is there some serious thought about dealing with people that we might not find savory at all, and how do we come to terms with that? I mean, sort of serious policy ideas about this. DR. ZELIKOW: That's the thing about freedom, is freedom involves calculated risks because if you really believe in freedom, you can't always pick who is going to win. And it's an amazing thing. Sometimes even in America, people are elected whom we don't prefer, and that's certainly true in other countries. But what the President has done is he's made a net assessment that over the long haul, even if free processes produce leaders that may disagree with the United States, that that kind of process is in the long run going to be more beneficial to the United States, will produce healthier societies that will be better long-term partners of ours in a modern world order than the alternative. And it's true that we may encounter some governments that make that choice seem very difficult and concrete, but the President has made that decision, and actually has done some things even in recent years to exemplify it in some particular cases I know of, but which I don't want to get into. QUESTION: Thank you, Dr. Zelikow, for a great presentation. My question is really on the broader issues that you raised. And as somebody who watched the debate between the Arab world and the United States very carefully, I noticed that -- I mean, the tacit understanding between the Arabs and America for years has been basically America takes care of the security issues in the region and they in turn help American on oil and other issues. Now it seems to me that the voices coming from the Arab world, people are talking about wanting America to deliver on peace, and the Americans want the Arabs to reform -- well, actually, America cannot deliver reform in the Arab world, and the Arabs cannot deliver peace. So, both sides, seem to me, are going into a gimmick that's not really -- the limits of their own power cannot deliver. I would like to hear your thoughts on that. DR. ZELIKOW: I think the problem was that if you reduce the bargain to a simple bargain of security in exchange for oil, it becomes an overwhelmingly commercial transaction in which each country is indifferent to the values and practices of the other. That indifference is not sustainable in our politics and among the American people, nor, I would argue, is that indifference sustainable among the Saudi people, which means that then American political leaders can't defend the relationship publicly and hide from it, and Saudi leaders can't defend the relationship publicly and they hide from it. These are not conditions likely to produce a long-term healthy relationship because it means it's not a relationship that can survive political forces when the doors get thrown open. And we saw how close this came in the aftermath of 9/11. So, what lesson does one take away from that? You have to think hard about what should be -- whatever one might comment about what the basis of the relationship was in the past, let's look forward. Let's look at the future. And it's less a matter of "you'll deliver this thing in that other country, and we'll deliver this thing in this other country.” It's more of "what's your vision of the future of your people, what do you want, and what do we want for the future of our people,” and is there actually some genuine overlap, some genuine converging values as we pursue our

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different paths that mean that we actually really are working in common and that there is a convergence there that we can publicly defend in both of our societies, based on an honest dialogue and open dialogue between friends. Now, that can be a difficult dialogue because, as you saw here today, it means we sometimes talk about things going on in your country, but equally you will sometimes talk about things going on in our country or in our policies that you don't like. That's natural and healthy. It happens in the relationship we have with all our friends. And that kind of relationship is likely to be much more sustainable, and I think will lead to a much more fruitful dialogue between our two great nations. MR. MARSHALL: I'm Dana Marshall, with Hunton & Williams. I wonder if I could take you out of the Arab world for a minute, but keep you in the region, and ask you a little bit about how the policy the Administration might have evolved since the President's inaugural statements, the speech regarding Iran. We have in less than a month elections there. Clearly the rubber meets the road in these issues that you were talking about, but just as clearly we have a very closed system there which masquerades as some sort of democracy. I wonder how do you apply the ideas that the Administration has, the tools the Administration may be able to use prudently in that case to try to promote some semblance of a democracy there? DR. ZELIKOW: Well, if I announce the policy of American intervention or coercion in the Iranian electoral process, it would produce just the results we don't want. So, what I think America can do is it can say we have a view on what freedom means. We don't have precise opinions on how each country should walk that path, but it's not an empty phrase, and I tried to elaborate here simply borrowing things that the President of the United States has already repeatedly emphasized as what freedom means. You can take that list and then you can look at Iran, and you don't need the United States Government to tell you how to make that judgment. Every person in this room can take that list, examine what they know about Iran based on their information, and come to their own conclusion about what they think. And with respect to the Iranian electoral process, you'll notice that they themselves are making a lot of decisions about what that's going to look like. Indeed, they've been thinking a lot about it just in the last 24 hours. So, let's see what they wish to do. Let's watch that process with care, keeping in mind whatever standards we think are appropriate for ultimately evaluating the result, but understanding that different societies are choosing their own path. In other words, the President is arguing that there are universal ideals. They are not American ideals. They are not Western ideals. They are universal ideals, and they are definable. Yet, those ideals do not dictate precise mimicking of an American path, a British path, a Dutch path, a Japanese path. We urge all countries to find a way to express the ideals which we believe their own citizens hold dear, and, indeed, I think that assertions nowhere as true as it is in Iraq. (Applause.) DR. ALTERMAN: I want to thank Dr. Zelikow for a very thoughtful and thought-provoking talk. I also want to thank, before we all break up, a few people who helped make today

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possible. First, Prince Faisal Bin Salman, the publisher of Asharq al-Awsat; Haim Malka, in my office, who did all sorts of things, small and large, to make today move as smoothly as it did; Yasser Al Ghasslan in Prince Faisal's office; Mamoun Fandy, who not only helped us shape some of this, but also brought us together in the first place, and a remarkable team of young interns who rarely get nearly enough credit for what they do, but called each of you and tried to make sure in huge ways over weeks, to make sure today went so smoothly, Rami Naser and Catherine Range, in my office, Emily Fall, Liora Danan and Torg Ferguson who helped out today. Your help is really appreciated, we will miss you as you go on for the rest of your careers. We hope you think fondly of your time at CSIS, and your helping us made today as successful as it was, I think, is a wonderful tribute to you and the skills you brought to our program. Thank you. (Applause.) (Whereupon, at 1:55 p.m., the program was concluded.)